ACCT cheat sheet

ACCT cheat sheet - 3. Inventory Specific Identification the...

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3. Inventory Specific Identification – the cost of each item sold is individually identified and recorded as cost of goods sold First-In, First Out – oldest inventory is the first inventory to be shipped out Last-In, First Out – newest inventory is the first inventory to be shipped out Weighted Average – when a unit is sold, the average cost of each unit in inventory is assigned to cost of goods sold W.A. = $ cost of good available for sale/# number of units available for sale 19. Bad debt expense = Sales x Bad debt loss rate (%) 20. Write off an uncollectible account – when it becomes clear that a particular balance is not going to be paid then a journal entry is recorded to remove the account receivable. (dr) bad debt expense(+E, - SE) & (cr) allowance for d.a.(+xA, -A) THEN (dr) allowance for d.a. & (cr) accounts receivable by same amount**if $ were recovered (dr) accounts receivable & (cr) allowance for d.a. THEN (dr) cash(+A) (cr) accounts receivable (-A) 22. Calculate sales revenue, cost of goods sold, ending inventory, net income Beginning inventory Sales revenue + Purchases - COGS Goods available for sale Gross profit - COGS Ending inventory 23. Apply lower-of-cost or market rule – inventory can: be easily replaced by identical goods at a lower cost, or become outdated/damaged. When the value of inventory falls below its recorded cost, the amount recorded for inventory is written down to its lower market value-> (dr) loss of inventory value(+E,-SE) & (cr) inventory(-A)LCM ensures that inventory assets are not reported at more than they’re worth. With this rule also if the market value of your inventory increases you still go
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ACCT cheat sheet - 3. Inventory Specific Identification the...

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