formula - Basic equations B/S: Assets = Liabilities +...

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Basic equations B/S: Assets = Liabilities + Owners’ equity I/S: Revenue – Cost of Goods Sold – SG&A – Tax = Net Income C/F: Cash flow during the year = cash flow from operation + cash flow from investing + cash flow from financing Statement of Owners’ equity: Retained earnings t = Retained earnings t-1 + NI t - Dividend t Accounts Receivable Relevant Formulae A/R EB = A/R BB + Credit Sales – Cash Received – Write-off + Recovery ADA EB = ADA BB + Bad Debt Expense – Write-off + Recovery Two methods for determining Allowance for Bad Debts Percentage of (Credit) Sales Fixes the Bad Debt Expense recorded for the year Aging Method Fixes the Ending Balance of Allowance for Bad Debts Bad Debt Expense is as a “Plug-in” Relevant entries Credit sales: Dr. A/R Cr. Revenue Record bad debt expense: Dr. Bad debt expense Cr. ADA When bad debt happens: Dr. ADA Cr. A/R Recovery of bad debt: Dr. A/R Cr. ADA Inventory INV EB = INV BB +Purchase/Production – COGS LIFO Reserve = cumulative difference in FIFO – LIFO inventory **or** LIFO Reserve = Ending Inv FIFO – Ending Inv LIFO Change in LIFO Reserve = COGS LIFO – COGS FIFO PP&E PPE EB = PPE BB + Acquisitions – Disposals Straight-line depreciation = (Purchase price – salvage value) / Useful life AccDep EB = AccDep BB + Depreciation – AccDep Disposal MV / Proceeds from sales = (BV-AccDep) + gain/loss Cash flow statement Indirect method differs from direct method only in the CFO session.
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formula - Basic equations B/S: Assets = Liabilities +...

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