Chapter 6
Sales Revenue
What is Sales Price X Number of Inventory Sold?
Inventory costing method that is most appropriate for a company with unique & expensive inventory
What is Specific Identification Method?
Ownership changes hands and revenue is recognized when goods leave the shipping dock.
What is FOB shipping?
Gross Profit Formula
What is Sales Revenue - COGS?
Older costs are assigned to COGS first
What is FIFO?
COGS (Periodical)
What is Beginning Inventory + Purchase - Ending Inventory?
COGS (Perpetual)
What is Cost per Unit X Number of Inventory Sold?
Journal entry if credit card processor charges the fee
What is
Debit: Cash and Credit Expense
Credit: Sales Revenue
Net Revenue Formula
What is Sales Revenue - Sales Returns and Allowances - Sales Discounts.
The initial entry when recording a note receivable
What is
Debit - Notes Receivable
Credit - Cash
FIFO and LIFO rule for Gross Profit
What is the Gross Profit will be higher with FIFO than LIFO?
These are the ONLY items subtracted from inventory cost
What is Purchase returns, allowances, and discounts?
If a corporation takes the discount within the discount period, which item decreases?
What is Inventory?
A/R, Sales Revenue, and COGS all increase.
What is Quick Ratio?
(Cash and cash equivalents + Short-term investments + Net current receivables) / Total current liabilities.
How is COGS classified on the financial statements?
Expense
Things you initially should check for when calculating inventory cost through FIFO, LIFO, and Average-Cost Method
What is:
1. Goods Available for Sale
2. Units Sold (or Total Cost)
3. Ending Inventory
AVERAGE-COST METHOD FOR INVENTORY
Units $/Unit $
Beginning Inventory 10 10 $100
Purchase 10 9 $90
Purchase 20 11 $220
20 units are sold for $15 each. What is the COGS under the average cost method?
What is $205?
Sales discount terms offer a 3% discount if paid in 7 days, otherwise the full balance is due in 21 days.
3/7, n/21
Linus Company uses the percent-of-sales method to estimate uncollectible. Net credit sales for the current year amount to $ 110,000, and management estimates 4% will be uncollectible. The Allowance for Uncollectible Accounts prior to adjustment has a credit balance of $ 3,000. The amount of expense to report on the income statement will be:
What is $7,400?
How much total interest revenue will be earned on a nine month, 8%, $12,000 note receivable?
What is $720?
LIFO INVENTORY COST METHOD
Units $/Unit $
Beginning Inventory 10 10 $100
Purchase 10 9 $90
Purchase 20 11 $220
20 units are sold for $15 each. What is the COGS under the LIFO method?
What is $220?
FIFO Method for Inventory Cost
Units $/Unit $
Beginning Inventory 10 10 $100
Purchase 10 9 $90
Purchase 20 11 $220
20 units are sold for $15 each. What is the COGS under the FIFO method?
What is $190?
Office Inc had credit sales of $620,000, cash sales of $210,000, and uses the percent of sales method to estimate bad debts, 4%. How much uncollectible accounts expense should be recorded?
What is $24, 800?
Carey Corporation received a four-month 9%, $ 2,800 note receivable on March 1. The adjusting entry on March 31 will include
What is a credit to Interest Revenue for $21?
Straiton Co had a beginning inventory of $2,000, ending inventory of $3,400. Net sales were $56,000 and net purchases were $35,000. What is the gross profit?
What is $22,400?