formula - Basic equations B/S Assets = Liabilities Owners...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
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.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/16/2012 for the course ACCOUNTING 15.501 / 1 taught by Professor Sugataroychowdhury during the Spring '04 term at MIT.

Page1 / 4

formula - Basic equations B/S Assets = Liabilities Owners...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online