ACCT 201 1st Edition Lecture 16 Outline of Last Lecture I Perpetual inventory system II Periodic inventory system Outline of Current Lecture III Recording purchases of merchandise Current Lecture Data from example in the book pg 262 E5 2 The company uses a perpetual inventory system DR CR DR CR CR DR A L 9 6 1650 inv DR 1650 acct payable CR SE 9 9 50 inv DR 50 cash CR 9 10 66 inv CR 66 acct payable 9 12 690 acct receivable DR 520 inv CR 690 sales revenue CR 9 14 45 acct receivable CR 34 inv 45 sales returns and allowances 9 20 760 acct receivable DR 760 sales revenue 520 COGS DR 34 COGS These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Sales Returns and Allowances is a contra revenue account to sales revenue which means it is offset against a revenue account on the income statement The normal balance of sales returns and allowances is a debit Companies use a contra account instead of debiting sales revenue to disclose in the accounts and in the income statement the amount of sales returns and allowances
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