687 Purchase Allowances

Cost of Sales

Fixed Operations

Cost of Sales Synopsis

Account 687 is established to record the cash or credit from the manufacturer for ordering and/or selling Parts and Accessories under regular or promotional programs.

Debits

Credits

 

  1. Purchase Allowances earned

  2. Stock order Allowances earned

  3. Purchase Discounts earned on Parts and Accessories

 

Example 1

Record the purchase of a stock-order from the manufacturer for $16,585 of which $1,265 is a Purchase Allowance.

Journal: Purchase

Entry:

 

Debit

Credit

Account 242

Inventory – Parts & Accessories

$16,585

 

Account 300

Accounts Payable – Trade Creditors

 

$15,320

Account 687

Purchase Allowances

 

$1,265