The first balance sheet presented under the new method is December 31,2014.The cumulative effect after tax in retained earnings is computed as follows:
The cumulative effect of the change is $15,000 plus $12,000 equals $27,000.
Definitions:
Credit Terms
The conditions under which credit is extended by a lender to a borrower, including repayment time frame and interest rate.
Credit Terms
The conditions under which a seller extends credit to a buyer, including the repayment period and any discount for early payment.
Inventory
The complete list of items such as goods, property, and raw materials a company holds for the purpose of resale or repair.
Credit Memo
A document issued by a seller to a buyer, reducing the amount owed by the buyer to the seller, typically due to a return or an overcharge.
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