Question

1. How are sales discounts computed? How are they recorded? Why are discounts offered?

2. What type of account is Sales, Returns and Allowances and how is it used?

3. What is the accounts receivable subsidiary ledger and how is it used? Why does a company keep a subsidiary ledger? Explain how a journal entry ends up in that subsidiary ledger?

4. What account is used to show that a company has collected sales tax but has not yet paid it to the government? What type of account is it?

Answer 1

• (1 )Sales discounts refers to the decrease in the sum due from a client because of early installment. It is treated as a conclusion from deals.
• Model - deals rebate = 10% on deals; sales= 100000
• consequently, deals markdown = 100000* 10/100 = 10000
• Diary passage for deals markdown
• Money a/c dr.
• Deals rebate a/c dr.
• To Accounts Receivable a/c
• Discounts are offered for -
• to upgrade client relationship
• accomplishment of deals objectivesold stocks are clearedbetter brand awareness.  
• (2) Sales return and recompense account is considered as contra-income account, which ordinarily has a charge balance. In the business income segment of a salary explanation the business return and allowancw is subtracted from deals in light of the fact that these records have the contrary impact on net gain.
• Recording deals return and remittance in a different contra-income account permits the executives to screen returns and recompense as level of by and large deals.
• (3) A records receivable backup record is a accounting record that shows the exchanges and installment history of every client to whom the business expands the credit. The equalization in every client account is occasionally accommodated with the records receivable parity in the general record to guarantee exactness. The auxiliary record is additionally regularly alluded to as the subledger or subaccount.
• By having the subtleties of the records receivable action in an auxiliary record, workers in an organization's credit branch of an organization can get to the credit deals data without approaching any data in the general record. How diary passages end up in backup record
• Record all exchanges utilizing the deals jornal, buys jornal, money receipts diary, money receipts jornal, money disbusrsements diary, and the general diary and post to the records receivable and creditor liabilities backup records. At that point get ready shedule of records receivable and a timetable of records payable.
• Toward the month's end, every one of the past diary sums are presented on the proper record in the general record, and any individual record postings.At the end money due must be equivalent to the records payable. In the event that the numbers didn't coordinate, we would discover where the blunder was and afterward fix it.
• (4) Sales tax payable record is utilized to show that an organization has gathered deals charge however has not yet paid it to the legislature.
• Sales tax payable record is a risk account that regularly has a credit balance. This record is credited when deals charge is gathered from clients and is charged when gathered measure of assessment is transmitted to the significant duty specialists.