BU387 Study Guide - Final Guide: Markdown, Deferred Income, Direct Method (Education)
Document Summary
Most i(cid:374)(cid:448)e(cid:374)tor(cid:455) is (cid:448)alued at (cid:862)lo(cid:449)er of (cid:272)ost a(cid:374)d (cid:374)et realiza(cid:271)le (cid:448)alue(cid:863) Periodic cogs and inventory not kept up to date determined @ end of period. In perpetual, cost of freight, purchase r+a, and discounts are all recorded in (cid:858)i(cid:374)(cid:448)e(cid:374)tor(cid:455)(cid:859) a(cid:272)(cid:272)ou(cid:374)t. In periodic, cost of freight, purchase r+a, and discounts are all recorded in separate accounts. Sale of 600 units at under perpetual. Sale of 600 units at under periodic. Periodic year-end adjusting entry (not required in perpetual systems) Each item purchased/sold is individually identified: fifo, weighted average cost. With moving-average, a new average unit cost is determined with every new purchase. Net realizable value (nrv) = estimated selling price estimated costs to sell/complete. Comparison of cost and nrv should be done on an item-by-item basis: Loss becomes part of cogs in i/s. Allowance account on b/s, loss recorded on i/s. Cogs = sales x (1-0. 3) = sales x 0. 7 = 280,000(0. 7) = ,000.
