ADMN 3221H Lecture Notes - Lecture 7: Accounts Payable, Weighted Arithmetic Mean, Income Statement
30 Mar 2020
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What is included in ending inventory: physical items, cost of items. Often one of the largest balance on the balance sheet. Inventory is an asset: held for sale in ordinary course of business. In production for sale work in process: materials and supplies to be used in production process or rendering of service. Represents the largest or one of the largest balances on b/s. Inventory is tangible: can be lost, stolen, damaged, destroyed, become obsolete. Costs ($: sticker price, purchase discounts, gross, debit purchases // credit accounts payable, contra. Ignore discounts: net, don"t ignore discounts, expense, vendor rebates, freight costs, part of costs of inventory if we have to pay for it, shipping point we pay for it, shipping destination they pay for it. March 10 gross amount is 40,000, terms 3/10, n60. Net method: recognize 97% of the 40,000 38,880 periodic. March 11 gross 25,000, terms 1/15, n/30. Net method: gross amount x 99% = 24,750.
