King Size International buys beds from a manufacturer for sale overseas. A shipment of beds to King Size was received slightly damaged. The manufacturer agreed to take an extra 10% off of its invoice price to King Size if it will keep and sell the beds to its customers. In this situation, King Size has received a:

Question

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King Size International is receiving an allowance from the manufacturer for keeping the slightly damaged beds and selling them to customers. This is a purchase allowance, as it is a reduction in the original purchase price. A sales allowance would occur if King Size International gave a discount to its customers for purchasing the damaged beds. A purchase return would only be applicable if King Size International returned the damaged beds to the manufacturer for a refund. A purchase discount is a reduction in the purchase price for paying within a certain timeframe, which is not the case in this scenario.

King Size International Buys Beds from a Manufacturer for Sale