--> another term for Statement of Earnings is Income Statement --> in income statement, you deduct the Sales Return & Allowances from the Gross Sales to come up with Net Sales --> in presentation purposes, usually it is only the Net Sales account that is shown
Sales Returns and Allowances is a contra income account.
Sales Returns and Allowances are contra revenue accounts because they reduce that total amount of sales. [Sales-Sales returns and allowances=Net sales]. They are reported on the income statement.
Sales 563400less:sales return 18690Net Sales 544710
net sales
Gross sales is the total value of sales before any deductions. Net sales is what is left of the gross sales after deductions and expenses, including discounts, returns and allowances.
Sales Returns and Allowances is a contra income account.
Sales returns and allowances is not a liability rather these are expenses or reduction in actual sales
Sales returns and allowances reduces the actual sales value that;s why shown as deduction from Sales Revenue in Income Statement
Sales Returns and Allowances are contra revenue accounts because they reduce that total amount of sales. [Sales-Sales returns and allowances=Net sales]. They are reported on the income statement.
Sales revenue minus sales return and allowances and sales discount equals?
General Journal Sales Returns and Allowances - A company with sales returns and allowances can record them in the General Journal.
Purchase return is a contra account because it reduces the balance in the Purchase account in an attempt to determine cost of goods sold. This is like sales returns and allowances being used to determine net sales on an entity's income statement.
sales+sales return=net sales
1. Sales - This refers to the net sales done by the company during the reporting period (After deducting returns, allowances and discounts charged on the invoice) 2. Net Income - Amount earned by the company after taxes, depreciation, amortization and payment of interests 3. COGS - Cost of goods sold or cost of sales 4. EBIT - Earnings before Interest and Taxes 5. EBITDA - Earnings before Interest, Taxes, Depreciation and Amortization 6. EPS - Earnings Per Share
Sales 563400less:sales return 18690Net Sales 544710
Debit: Sales Returns & Allowances Credit: Accounts Receivable :)
A debit on sales, while crediting cash means a cash refund to a customer.A sales transactionFor a service provider, the journal entry for a cash sales transaction has a debit on cash, and a credit on sales. Assuming a sales price of $100:cash 100 (debit)sales 100 (credit)A refundIf for whatever reason the customer requests (and receives) a (partial) refund, sales is reduced. The journal entry of a $30 refund would be the reverse of the above: sales 30 (debit)cash 30 (credit)Alternative journal entryHowever, companies would normally like to keep track of the amount of refunds. Instead of using 'sales' with a refund, a different T-account is used:sales allowances 30 (debit)cash 30 (credit)Sales allowances is a contra-T account to sales, and presented jointly in the income statement (sales minus sales allowances is net sales).For a trading company, there can also be sales returns (physical return of the goods), or a T-account 'sales returns and allowances'