# Merchandising Transactions for Sales - Accounting

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All right. Now let's talk about the sales

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side of it now we're the seller selling

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it to our customers

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now what kind of special transactions

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happen here and they're pretty much the

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same as

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what we talked about in the purchasers

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but we're just looking at it from a

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different side now.

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So the first one I'm going to continue

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on with the transportation because again

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those are really two parts

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we talked about FOB shipping point last

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video in this one we're going to talk

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about FOB destination which is the other

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side of that.

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So again transportation costs uh the

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responsible party paying for the freight

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cost depends on which party

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assumes this risk that's the exact same

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thing we talked about last one,

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if the risk of loss during the transit

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is assumed by the seller

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meaning it ends at the destination point

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then the shipping terms are known as FOB

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destination so the seller obtains the

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risk

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the liability of loss up until the point

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where it's delivered

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that's going to be considered FOB

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destination and the seller is the one

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that's

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specifically paying for it.

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So again if you're looking at this

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seller transportation buyer and you have

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again the shipping point destination and

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it still falls that way, if it's the

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seller responsibility

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they obtain the risk from the point of

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shipping until it is delivered at its

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destination,

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now this one's a little bit different

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when you're dealing with the journal

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entry

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because at this moment we were able to

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add the cost into the inventory to the

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last one because we're the buyer and we

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haven't sold that inventory yet so we

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and then expense it when it's sold, this

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one we can't do that because we've

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already sold the inventory that's why

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we're sending it to its customers

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because they bought it

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so I can't add it to inventory I'm

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actually going to have to expense this

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in its own account

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and I'm just going to call it something

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like delivery expense or transportation

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expense

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more times than none is delivery expense

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for that amount and then again cash.

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So if it's FOB shipping point we're

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going to put it into inventory

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if you are the responsible party if

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you're not you do nothing,

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if it's FOB destination and you're the

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responsible party we put it into

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delivery expense,

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okay, that's the transportation cost side

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of it.

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Now let's talk about something that we

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talked about again another one we have

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sales return we talked about purchase

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return last one

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this one's dealing with sales returns

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and allowances, so

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again a return is a merchandise uh a

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seller sells

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back or sales and then is brought back

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so our customers bringing it back to us

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um the effects of the return the

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opposite original with one exception

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and it really depends on kind of you

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know who's I guess you'd say who's

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teaching this too but

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I'm giving you kind of the book version

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of this the more accurate version of

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this.

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So if we're going to look at a purchase

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this is what it would look like

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as the original purchase cash and

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accounts receivable

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cogs and then we would credit sales and

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inventory that should look familiar from

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to record uh or recognize a sale of

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inventory.

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Now what would it look like if they

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brought that back? Well it would look

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exactly the opposite of with one minor

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difference and that is it would not be

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sales revenue

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we're going to claim this one as sales

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returns and allowances this is kind of a

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side account that lets us know okay this

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is what we sold

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and this is what was brought back, that

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way we can

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kind of show the whole picture to the

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investors that, yeah we did really sell

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this but

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we had this brought back um and so

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that's why we use a different account

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but then the rest are the same inventory

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becomes the debit and then you have cash

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and

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ar whichever one you use is going to be

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the credit and then you're also going to

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have cost of goods sold

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as the final credit, so again we're just

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flipping those but changing sales

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revenue into sales return and allowances.

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If you're doing this for an allowance

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much like the last one

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it's going to look very similar in

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allowances reduction the cost of

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defective or unaccepted

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merchandise that a seller issues so this

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time we're giving this to our customers

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but it's not going to be the exact

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opposite, okay, there's the original again

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that's that doesn't change so again cash

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sales revenue college inventory there's

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our two debits and our two credits

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but this time if we give an allowance

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we're not actually getting the inventory

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back all we're doing is taking it off of

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their

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our revenue and so for this one this

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would be

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sales returns and allowances for that

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amount and then it would be

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cash or accounts receivable however

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they pay.

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Notice I'm not touching cogs I'm not

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touching inventory because we gave the

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allowance they keep it

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we're not doing a thing we're not

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getting a thing back I should say

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so. Last one we have sales discounts

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again much like we had purchase

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discounts we have cash discounts

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creatively this is the cash

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discount applied to sales just like the

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last one is applied to purchases.

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It's going to look the same it's

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still going to look the same it's still

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going to mean the same thing

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2's going to tell us what the discount

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is 10 is going to tell us the discounted

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period

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the 30 is going to tell us when we have

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to pay the entire thing off by.

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If we're going to look at this one or

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excuse me for the receivables amount

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paid within the discounted period

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the sales discount account is increased

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by the discount amount

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and so let's look at this, so we have

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uh if we're going to do this and we're

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we were getting paid this

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so some one of our customers is paying

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off our discount uh

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we have cash because they're paying it

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off and that's going to be the account

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amount minus the discount so that's what

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they're paying off they're not paying

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off the entire thing

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and then we're going to have the

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sales discount again that's telling us

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what the discount amount is notice I'm

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not putting it into sales

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revenue it'll affect revenue but I'm

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putting it into discounts specifically

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because again I want to show what I did

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sell in

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total in revenue and this is what I had

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to take off because of a discount

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and then finally I'm going to take it

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out of my accounts receivables

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as a credit for the total amount

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receivables amount, so that's what a

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sales discount would look like.

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And that's everything from the special

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inventory

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sales transactions from the sale side so

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we've done both sales and purchase.

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Appreciate it.