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Net of discount — AccountingTools

For example, a coupon offers 20% off the $100 retail price of a product, net of discounts. Other applicable discounts are a 10% Christmas discount and a 5% volume discount. Thus, the other two discounts are applied first to arrive at an $85 price for the product, after which the 20% coupon offer is applied, resulting in a $17 discount related

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Accounting for sales discounts — AccountingTools

A sales discount is a reduction in the price of a product or service that is offered by the seller, in exchange for early payment by the buyer. A sales discount may be offered when the seller is short of cash , or if it wants to reduce the recorded amount of its receivables outstanding for other

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Types of discounts — AccountingTools

There are multiple types of discounts from sales that customers can earn. They are typically employed to either attract new customers, retain old ones, enhance financing options, or manage inventory levels. These discounts are as follows: Buy one, get one free . This discount may require a

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Cash discount definition — AccountingTools

A cash discount is a reduction in the amount of an invoice that the seller allows the buyer. This discount is given in exchange for the buyer paying the invoice earlier than its normal payment date. There are two reasons why a seller might make this offer: To obtain earlier use of cash , which

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How to account for a sales discount — AccountingTools

A sales discount is a reduction taken by a customer from the invoiced price of goods or services, in exchange for early payment to the seller. The seller usually states the standard terms under which a sales discount may be taken in the header bar of its invoices.An example of these terms is "2/10 net 30," which means that a customer can take a two percent discount if it pays the invoice

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How to account for bond issue costs — AccountingTools

If a bond issuance is paid off early, then any remaining bond issuance costs that are still capitalized at that time should be charged to expense when the remaining bonds are retired. Bond Issuance Cost Example. For example, ABC International incurs $50,000 to issue bonds. The bonds will be retired in 10 years.

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How to calculate the issue price of a bond — AccountingTools

The issue price of a bond is based on the relationship between the interest rate that the bond pays and the market interest rate being paid on the same date. The basic steps required to determine the issue price are: Determine the interest paid by the bond.For example, if a bond pays a 5% interest rate once a year on a face amount of $1,000, the interest payment is $50.

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How to calculate the present value of a bond - AccountingTools

A bond is a fixed obligation to pay that is issued by a corporation or government entity to investors.The issuer may have an interest in paying off the bond early, so that it can refinance at a lower interest rate.If so, it can be useful to calculate the present value of the bond. The steps to follow in this process are listed below. First, we need to use several assumptions as we work through

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Accounting for bonds — AccountingTools

The accounting for bonds involves a number of transactions over the life of a bond. The accounting for these transactions from the perspective of the issuer is noted below.. Bond Issuance. When a bond is issued at its face amount, the issuer receives cash from the buyers of the bonds and records a liability for the bonds issued. The liability is recorded because the issuer is now liable to pay

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Accounting for gift cards | Gift certificates

The essential accounting for gift cards is for the issuer to initially record them as a liability , and then as sales after the card holders use the related funds. There are varying treatments for the residual balances in these cards, as noted below. Background of Gift Cards Gift cards are a

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