5.3 recording of sales merchandise Flashcards
what are the 5 steps to recognizing revenue received from selling goods
1) determine contract
2) determine performance obligations
3) determine transaction price
4) allocate transaction price to POs
5) recognize revenue as product is delivered
TRANSACTION PRICE IS REDUCED BY
variable consideration
variable consideration includes what?
the amount of expected sales return and allowancesS
SOOO transaction price is reduced by the
sales returns and allowances
How do we take into consideration sales returns,allowances, discounts under aspe
A) RECORD THE FULL AMOUNT OF THE SELLING PRICE
B) use a contra revenue account to record the sales returns/ allowances/ discounts
When is the performacne obligttion satisifed in the product sense?
when the ownership of goods has transferred from the seller to the buyer
EVIDENCE IS VERY IMPORTANT IN ACCOUNTING TRANSACTIONS
WORD
WHAT provides evidence for
1) cash transaction
2) transaction on account
cash register tapes
sales invoice
What are the two journal entries that need to be made to recrod each sale in a perpetual inventory system
1) record the sales revenue
2) recrod the cost of the emrchandise sold (Reduce inventory account)
What account tracks expected sales returns and allowances
refund liability
how do we incorproate the refund liability account into the two journal entries we make
1) in the recording of sales JE
-> Take out the refund liablity value from sales
2) In the cogs JE:
-> Take out the estimated inventory returns from cogs
on SOI why does most merch company only provide a single sales figure
1) hide info from comp
2) soi would be wayy longer
how is sales tax recorded by a company
NOT AS REVENUE!! recroded as sales tax payable
how does the buyer recrod the freight if fob destination
they dont
how does seller recrod the freight costs when fob destin
DR frieght out
CR cash
