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Q5.   What are the reasons that a company gives trade discounts? Why are trade discounts not...

Q5.  

What are the reasons that a company gives trade discounts? Why are trade discounts not recorded in the accounts like cash discounts?

BE7-4.

(LO 2) Roeher Company sold $9,000 of its specialty shelving to Elkins Office Supply Co. on account. Prepare the entries when (a) Roeher makes the sale, (b) Roeher grants an allowance of $700 when some of the shelving does not meet exact specifications but still could be sold by Elkins, and (c) at year-end; Roeher estimates that an additional $200 in allowances will be granted to Elkins.

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What are the reasons that a company gives trade discounts?
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