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Technology Stocks : 3DO: Hot Games for Hot Machines (THDO) -- Ignore unavailable to you. Want to Upgrade?

To: Bruce Prescott who wrote (3355)	7/30/1998 5:41:00 PM
From: James Strauss	Read Replies (1) \| Respond to of 4081

>>>I read something about 3DO's return policy which lets customers return games for a full refund for a period of time after purchase. Is there some kind of buffer in accounts receivable for returns?<<< ************************** I don't think so... I would imagine that those games that are returned that haven't been paid for yet are debited against accounts receivable and the sales accounts... Aside from that most companies have an allowance for doubtful accounts that estimates what % of money owed won't be paid... ************************** >>>Also, will accounts receivable reduce if 3DO games are discounted at retail -- does the discount pass back to 3DO or does the retailer take the hit when games don't sell?<<< **************************** It all depends on the terms of each order... Sometimes a company will assist the retailer, and sometimes the retailer does it on their own... Generally, discounts are treated on the Income Statement as a cost of sales or promotional expense... Indirectly, anything shipped and not paid for is reflected on the Balance sheet in Accounts Receivable at whatever the terms of the order dictated... Jim