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Cost of goods available for sale cost of goods sold

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Cost of Goods Available for Sale – Cost of Goods Sold = Ending Inventory (note – COGAS andCOGS were calculated for each method on the previous 2 pages)Compute Gross Profit (all 3 methods)Price per Unit * # of Units Sold = Sales Revenue (note – the selling price of $9 was provided inthe facts at the beginning of this example)
Sales Revenue – Cost of Goods Sold = Gross Profit (note – COGS was calculated for each methodon the previous 2 pages)Questions #26 - #30 – “Cash & Accounts Receivable” (Chapters 7 and 8)There are 3 primary concepts that will be tested for this learning objective:1.Bank reconciliations2.Adjustment to Accounts Receivable using the “allowance method”3.Notes Receivable (specifically determining interest due given an interest rate and loan period)#1 – Bank Reconciliations#2 – Allowance methodWhen companies sell a product/service on credit, they credit Sales Revenue on the income statementand debit Accounts Receivable on the balance sheet.An accounting principle calledexpense recognitionrequires a company to determine the portion of Sales Revenue they will not collect from customers(referred to asBad Debt Expense).Theallowance methodis the process companies follow todetermine how much Bad Debt Expense should offset Sales Revenue for the current year.The“AC201 study guide – allowance method for bad debt”file in the Final Exam Study Guide pageprovides a comprehensive example of how the allowance method works.#3 – Notes receivableThese questions almost entirely relate to computing interest.Here are a couple examples:The interest on a $39,000, 5%, 1-year note receivable is?o39,000 * .05 =$1,950(no pro-rating needed since the note was 1-year long)The interest on an $11,000, 10%, 90-day note receivable is?
o$1,100/12 = $91.67 interest per montho$91.67 * 3 =$275for 90-days (i.e. 3 months)The interest on a $34,000, 6%, 30-day note receivable is?
Questions #31 - #35: “Long-lived Assets” (Chapter 9)For this learning objective, it is very important to carefully read what the question is really asking(e.g.depreciation expense vs. accumulated depreciation vs. book value).Vocabulary/Concepts to KnowCapital expendituresCost allocationSalvage valueDepreciable cost (Cost – Salvage value)Depreciation expenseAccumulated depreciationBook value (Cost – Accumulated Depreciation)Property, Plant & Equipment (which assets are included in PP&E on the balance sheet?)Intangible asset (definition and examples)Amortization expenseFormulas to KnowDepreciation expense= (Cost – Salvage Value)/Useful LifeAccumulated Depreciation= Sum of depreciation expense from all prior yearsDepreciable cost= Cost – Salvage ValueBook value= Cost – Accumulated DepreciationRevised Depreciation expense= (Cost – Revised Salvage Value – Accum. Dep.)/Remaining Useful LifeAmortization expense= (Cost/Useful Life) * (# of months owned by company/12 months)Gain/(loss) from an asset sale= Cash proceeds – book valueRatios to KnowReturn on assets= Net Income / (Average TotalAssets)

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Term
Spring
Professor
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Tags
Balance Sheet, Generally Accepted Accounting Principles

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