Inventory Cost Methods
October 1 Beginning Inventory- 15 units @ $20
October 10 Purchased Inventory- 10 units @ $22
October 17 Purchased Inventory- 25 units @ $23
October 28 Sold Inventory- 38 units @ $50
Calculate sales revenue.
$1,900
Purchased on account from ABC Co., $4,000, 1/10, n/30, fob shipping point. What would you record as the journal entry?
Debit Inventory for $4000, and Credit Accounts Payable for $4,000.
What types of account is allowance for uncollectible accounts? (A,L,SE,R,E)
Conta Asset
What does this formula represent: Beginning Inventory+Net Purchases-Ending Inventory?
Calculation for Cost of Goods Sold
What does the terms 2/10, n/45 mean?
A 2% discount if paid in 10 days, net due in 45 days
October 1 Beginning Inventory- 15 units @ $20
October 10 Purchased Inventory- 10 units @ $22
October 17 Purchased Inventory- 25 units @ $23
October 28 Sold Inventory- 38 units @ $50
Calculate the Cost of goods sold using FIFO.
$819
Sold goods on account to DEF Co, $6,500, 2/10, n/30; the goods cost the company $3,500. Shipping terms are fob shipping point. What would you record as the journal entry?
Credit Sales Revenue for $ 6,500 and
Debit Cost of goods sold for $3,500, Credit Inventory for $3,500
Find the estimated uncollectible accounts based on the aging method from the following information.
Accounts Receivable Age Expected % uncollectible
$650,000 not due 3%
$200,000 0-30 days 8%
$60,000 31-90 days 20%
$40,000 >90 days 70%
$75,500
The Following amounts were reported on the income statement:
Sales Revenue- 440,000
Advertising Expense- 60,000
Sales Returns- 10,000
Salaries Expense- 55,000
Utilities Expense- 25,000
Interest Expense- 45,000
Cost of goods sold- 180,000
What was the Net income?
$65,000
In a period when inventory costs are rising, the inventory method likely to result in the highest ending inventory is?
FIFO
October 1 Beginning Inventory- 15 units @ $20
October 10 Purchased Inventory- 10 units @ $22
October 17 Purchased Inventory- 25 units @ $23
October 28 Sold Inventory- 38 units @ $50
Calculate the Ending Inventory using LIFO.
$240
Customer returned goods they were not satisfied with, $400; the goods had a cost of $200. What would you record as the journal entry?
Debit Sales Return for 400, Credit Accounts Receivable $400
and
Debit Inventory $200, credit Cost of goods sold $200
What would you record as the adjusting entry for bad debt if the estimated uncollectible accounts is $75,500 and the allowance for uncollectible accounts already has a credit balance of $3,500 before adjustments?
Debit Bad Debt Expense for $72,000, Credit Allowance for Uncollectible Accounts for $72,000
The company had the following amounts taken from vaious accounts:
Sales Discounts- 35,000
Deferred Revenues- 23,000
Sales Revenue- 450,000
Accounts Receivable- 215,000
Utilities Expense- 25,000
Income tax Expense- 45,000
Cost of goods sold- 180,000
What was the gross profit?
$235,000
The seller transfers title to the buyer once the merchandise is shipped, buyer pays freight. This is?
FOB shipping point
October 1 Beginning Inventory- 15 units @ $20
October 10 Purchased Inventory- 10 units @ $22
October 17 Purchased Inventory- 25 units @ $23
October 28 Sold Inventory- 38 units @ $50
Calculate the Ending Inventory using the weighted average cost method.
$262.80
June 25 Received Payment from DEF company for the full amount due from June 17 purchase of $6,500 and return of $400 with terms 2/10, n/30. What would you record as the journal entry on June 25?
Debit Cash for $5,978 and Sales Discount for $122, Credit Accounts Receivable for $6,100.
What would you record as the journal entry to write-off $12,000 as uncollectible?
Debit Allowance for uncollectible accounts for $12,000, Credit Accounts Receivable for $12,000
The following information was found on the income statement:
Sales Revenue- 234,000
Sales Returns & Allowances- 2,500
Cost of goods sold- 105,700
Advertising Expense- 9,800
Depreciation Expense- 10,600
Office Supplies Expense- 7,540
Sales Salaries Expense- 13,500
Balance Sheet:
2019 Inventory- 16,500; 2020 Inventory- 14,500
2019 Accounts Receivable- 12,000; 2020 Accounts Receivable- 16,000
What was the Average Collection period for accounts receivable during 2020?
22 days
Gershwin Wallcovering shipped the wrong shade of paint to a customer. The customer agreed to keep the paint upon being offered a 15% price reduction. The price reduction is an example of what?
Sales Allowance
October 1 Beginning Inventory- 15 units @ $20
October 10 Purchased Inventory- 10 units @ $22
October 17 Purchased Inventory- 25 units @ $23
October 28 Sold Inventory- 38 units @ $50
Calculate Gross Profit/Margin using LIFO.
$1,045
Made full payment to ABC Co. on June 26 for their purchase on account on June 16 for 4,000 with terms 1/10, n/30. What would you record as the journal entry on June 26?
Debit Accounts Payable for $4,000, Credit Cash for $3,960 and Inventory for $40.
How would you record the journal entry if you unexpectedly collected $1,500 on an account that was previously written off?
Debit Accounts Receivable for $1,500, Credit Allowance for uncollectible accounts for $1,500;
and
Debit Cash for 1,500, Credit Accounts Receivable $1,500
The following information was found on the income statement:
Sales Revenue- 234,000
Sales Returns & Allowances- 2,500
Cost of goods sold- 105,700
Advertising Expense- 9,800
Depreciation Expense- 10,600
Office Supplies Expense- 7,540
Sales Salaries Expense- 13,500
Balance Sheet:
2019 Inventory- 16,500; 2020 Inventory- 14,500
2019 Accounts Receivable- 12,000; 2020 Accounts Receivable- 16,000
What was the average days in inventory during 2020?
107 days
The amount of cash that is expected to be collected on accounts receivable is referred to as?
Net Realizable Value