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Accounting At Your Fingertips, 2e by George Murray, CPA.

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4.2 Adjusting and Summarizing Sales

Understanding Discounts

Sales Returns and Allowances

Monitoring High Levels of Returns

In this subchapter, we discuss discounts and sales returns, and you learn how to adjust sales and summarize these transactions for financial reporting.

Understanding Discounts

Customers who pay on account are often offered a discount if they pay by a certain time. The terms are typically listed as 2/10, n/30, which means they get a 2 percent discount if they pay within 10 days and owe the balance 20 days later (30 days after the purchase). Most customers like to take advantage of discounts if at all possible, as this is most cost-efficient. There are two types of discounts:

• Cash discounts

• Sales discounts

Cash vs. ...

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