Questions: September 26: After negotiations, granted a 600 allowance to Sunnydale Company for merchandise purchased on September 25.

The scenario describes a transaction involving an allowance granted to Sunnydale Company for merchandise purchased. Here's a breakdown of the situation:

1. Transaction Date and Details:

   • On September 25, Sunnydale Company purchased merchandise. The specifics of the purchase, such as the total amount or the nature of the merchandise, are not provided.
   • On September 26, after negotiations, an allowance of $600 was granted to Sunnydale Company. An allowance typically refers to a reduction in the price of goods due to issues such as defects, late delivery, or other agreed-upon reasons.

2. Accounting Implications:

   • For Sunnydale Company: The allowance reduces the cost of the merchandise purchased. In accounting terms, this would decrease the accounts payable or increase the accounts receivable, depending on whether the purchase was on credit or cash.
   • For the Seller: The seller would record this allowance as a reduction in sales revenue or as a sales allowance. This would decrease the accounts receivable or increase the accounts payable, depending on the terms of the sale.

3. Example:

   • Suppose Sunnydale Company initially purchased merchandise worth $10,000 on credit. After the $600 allowance, the net payable amount would be $9,400. This adjustment would be reflected in both companies' accounting records.

4. Considerations:

   • The reason for the allowance should be documented for clarity and future reference.
   • Both parties should ensure that their financial records accurately reflect this adjustment to maintain accurate financial statements.

This transaction highlights the importance of negotiations and adjustments in business dealings, ensuring that both parties reach a fair agreement when issues arise with purchased goods.