FABM2- Periodic

The cost of transporting the merchandise or goods from the seller's place to the buyer's place of business.

• Purchases

• Sales

• Freight Out

• Freight In

Normal balance of Purchase Returns and Allowances

• Debit

• Credit

Reduction from the purchase price of the merchandise or goods bought granted by the supplier to the buyer or customer for paying within the dicount period

• Purchases

• Purchase returns and allowances

• Purchase Discount

• Freight in

Normal Balance of Freight In

• Debit

• Credit

This is not recorded or hown in the buyer's or seller' books

• Trade Discount

• Cash Discount

More appropriate system to use for businesses selling goods with different low-priced items.

• Periodic System

• Perpetual System

Normal balance of Sales Return and Allowances

• Debit

• Credit

Journal entry if account collected after the discount period

• Debit: Cash and Sales Discount

  Credit: AR

• Debit: Cash

  Credit: Accounts Receivable &

  Purchase Return and Allowances

• Debit: Cash

  Credit: Accounts Receivable

• Debit: Cash

  Credit: Accounts Receivable

The proceeds from the sales price of goods sold credited to the revenue account in the accounting period when the sales were made.

• Service Revenue

• Capital

• Purchases

• Sales

Cash discount is recorded or shown in the buyer's and seller's books

• TRUE

• FALSE