Business Administration 2257 Study Guide - Midterm Guide: Income Statement, The Royal And Ancient Golf Club Of St Andrews, Bank Charge

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*pay attention to when things were bought/FISCAL YEAR *Should it be expensed/added to revenue
*pay attention to if sales discount has been taken off ***FOOT NOTES
MERCHANDISE INVENTORIES
***Use Chart
Discounts, FOB, duties
1.have inventory, units, $/unit columns
- inventory is full cost
* return( net of= w/ discount) - Dr R&A full amount
w/o discount, Cr discount amount, Cr cash
*COGAFS (T/B inventory) - COGS = ENDING INVENTORY
(Find by remaining units + valuation)
*UNIT COST calculate unit cost after all returns have
happened (include in calculation)
Ending Inventory
1. the units from the physical inventory count +
any units in transit that the company owns
2. Value units using inventory valuation
methods
-FIFO > valued from most recent purchase
* order#, # units, price/unit
*do’t iclude goods i trasit
-AVG Cost > (COGAFS/ UAFS) x (E/B) units ( not affected
by goods in transit)
CLOSING INVENTORY ACCOUNT
-COGAFS = TB$ in inventory
-COGS plug, Cr inventory, Dr Cogs ex
LONG-LIVED ASSETS + TRADE INS
-installation fee included in Dr of asset
Trade-In Steps
1. Depreciate asset to point-of-sale
2. Calculate BV (HC-A/D)
3. Compare BV with trade in allowance
4. If BV> Cash received, debit loss on trade exp
5. If BV < Cash received, credit gain on trade
6. Do not record Cash Effect for TIA
7. Remove old asset and A/D from records
8. Cash received = New asset TIA
9. Record Gain/Loss = Cash received Book
value
(Sale)
1. 1-3 Same
2. 4. Record effect on cash (Selling price of
asset)
3. 5. Remove old asset, A/D from records
4. 6. Record Gain/Loss = BV Cash received
(Sale)
5. Record new asset, credit cash, A/D it to
fiscal end
Impairment
If BV < Recoverable amount
Dr Impairment Loss (expense) Cr A/D
-CANT WRITE OVER B.V.
Intangible Assets
Record cost, equal amortization through useful life
Finite patent, copyright, R&D
Indefinite impair (except goodwill)
TYPES OF DEPRECIATION
Diminishing ((Book Value) x 1/a x 1/12) where
BV is Historical Cost AD
o NOT DEPRECIATE PAST RESIDUAL VALUE
if do, use ->
(B.V R.V. = Depreciation expense)
o last year assets life depreciation =
BV RV
Straightline (Hc RV) x 1/a x n/12
Units Production ((HC RV) / total units) x un
ACCOUNTS RECEIVABLE/ NOTES RECEIVABLE
Accounts Receivable get number or derive
from total sales and check for sales discount
(A/R + sales discount = sales)
Sales discount ONLY for credit terms
Ca’t pay? Cr. A/R, Dr. AFDA – DON’T EXPEN“E
TILL CONFIRMED
NET REALIZABLE VALUE lower of two, if
lower,
AFDA
Ca’t pay? Cr. A/R, Dr. AFDA – DON’T EXPEN“E
TILL CONFIRMED
Cannot account for a payment of an account
previously written off directly from AFDA;
therefore, post it back to A/R before cash
Find E/B from A/R % uncollectable
Dr bad debt ex
Cr plug
plug = bad debt ex
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Document Summary

* return( net of= w/ discount) - dr r&a full amount w/o discount, cr discount amount, cr cash. *cogafs (t/b inventory) - cogs = ending inventory (find by remaining units + valuation) *unit cost calculate unit cost after all returns have happened (include in calculation) Ending inventory : 1. the units from the physical inventory count + any units in transit that the company owns. Avg cost > (cogafs/ uafs) x (e/b) units ( not affected by goods in transit) If bv> cash received, debit loss on trade exp. Record effect on cash (selling price of asset: 5. Remove old asset, a/d from records: 6. Record gain/loss = bv cash received (sale: record new asset, credit cash, a/d it to fiscal end. Types of depreciation: diminishing ((book value) x 1/a x 1/12) where. Bv is historical cost ad: not depreciate past residual value. If do, use -> (b. v r. v. = depreciation expense) last year assets life depreciation =