Accounting treatment of purchase discounts

Reference no: EM131051000

(Accounting Treatment of Purchase Discounts) Shawnee Corp., a household appliances dealer, purchases its inventories from various suppliers. Shawnee has consistently stated its inventories at the lower-of-cost (FIFO)-or-market.

Instructions

Shawnee is considering alternate methods of accounting for the cash discounts it takes when paying its suppliers promptly. From a theoretical standpoint, discuss the acceptability of each of the following methods.

(a) Financial income when payments are made.
(b) Reduction of cost of goods sold for the period when payments are made.
(c) Direct reduction of purchase cost.

Reference no: EM131051000

Questions Cloud

Consider the labor market : Consider the labor market. If the government imposes a binding minimum wage on employers, how will this affect the labor market, ceteris paribus? (Carefully label the salient portion of your graph.)

Management is considering a stock split : JPix management is considering a stock split. JPix currently sells for $120 per share, and a 3-for-2 stock split is contemplated. What will be the company's stock price following the stock split assuming that the split has no effect on the total mark..

Prepare a one pages summary paper about the article : Write a summary paper about the article "China Investigates Baidu After Student's Death From Cancer" By AUSTIN RAMZY. The summary paper should be 300 words.

What is the average of the amounts : What is the average of the amounts ?

Accounting treatment of purchase discounts : (Accounting Treatment of Purchase Discounts) Shawnee Corp., a household appliances dealer, purchases its inventories from various suppliers. Shawnee has consistently stated its inventories at the lower-of-cost (FIFO)-or-market.

Product price elastic or price inelastic : Consider a product that you have purchased recently. If the price of this item increases, how would you adjust your purchases? Is the Demand for this product Price Elastic or Price Inelastic?

Calculate the maximum stress at full pressure : Calculate the maximum stress at full pressure that could drive the growth of a crack. State, with justification, whether or not the service condition represents a high load on the structure

What are ways to mitigate the problems : Do you think having local government representatives inspect remodeling and building activities helps to reduce any of the problems? Explain your answers.

Expected rate of return on their investment : What is the expected rate of return on their investment if they buy u units of insurance? What number of units will minimize the standard deviation of their return? What is this minimum value? And what is the corresponding return?

User Account

All Pages