Determining the Effects of Credit Sales, Sales Discounts, Credit Card Sales, and Sales Returns and Allowances on Income Statement Categories
Brazen Shoe Company records Sales Returns and Allowances, Sales Discounts, and Credit Card Discounts as contra-revenues. Complete the following tabulation, indicating the effect (+ for increase, ˆ’ for decrease, and NE for no effect) and amount of the effects of each transaction, including related cost of goods sold.
July 12 Sold merchandise to customer at factory store who charged the $300 purchase on her American Express card. American Express charges a 1 percent credit card fee. Cost of goods sold was $175.
July 15 Sold merchandise to Customer T at an invoice price of $5,000; terms 3/10, n/30. Cost of goods sold was $2,500.
July 20 Collected cash due from Customer T.
July 21 Before paying for the order, a customer returned shoes with an invoice price of $1,000, and cost of goods sold was$600.

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Cost of Goods Sold Transaction July 12 Net Sales Gross Profit July 15 July 20 July 21