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ACCT-255 Final Review

Chapter 7

  • Financial Assets
  • Cash and Receivables
  • Disposition of Accounts and Notes Receivables
  • Bank Reconciliation

Chapter 8

  • Valuation of Inventory
  • The effects of inventory errors
  • FIFO, LIFO, Weighted - Average

Chapter 9

  • Inventories: Additional Valuation Issues
  • Lower cost of market
  • Relative sales value method
  • Gross profit and retail inventory method

 

Chapter 7:  Cash and Receivables

1. Cash

  • Effective interest rate = Total Interest Cost / Total Principal

2. Receivables

  • Trade Discount
  • Cash Discount
    • Gross method
    • Net method
    • Uncollectible Accounts Receivables

(1)     Percentage of sales

(2)     Percentage of receivables                      

                Allowance                                                       Allowance

Beginning Balance                                       Beginning Balance

(1)  Percentage of Sales                              X (Journal Entry for Bad Debt)

Ending Balance                                          (2)  Percentage of Receivable

  • Notes Receivable
    • Notes issue at face value
    • Notes issue at discounts
    • Notes issue at premium
  • Sales of Receivable    
    • Sales without resources
    • Sales with resources

Chapter 8:   Valuation of Inventories: A cost basis approach

 

1. Inventory classification and control

  • Perpetual system
  • Periodic system

2. Physical goods included in inventory

  • Goods in Transit
  • FOB shipping point - buyer's
  • FOB destination- seller's
  • Consignment goods - seller's
  • Sales with buyback - seller's
  • Sales with high rate of return - buyer's
  • Sales on installment - buyer's

3. Evaluation of inventory methods

  • FIFO
  • LIFO
  • W/A

4. Cost of Inventory

  • Product cost
  • Period cost
  • Manufacturing cost

5. Inventory error effect

 

Chapter 9:  Inventories: Additional Valuation Issues

 

1. Lower cost and market

  • Cost
  • Replacement cost
  • NRV (Net Realizable Value = selling price - cost completion and disposal)

 

 

2. Gross Profit Method of Estimating Inventory

Beginning Inventory

+ Purchases

________________________________ 

Goods available for sale (at cost)

Sales

- Gross Profit

_______________________________

- Estimated Cost of Good Sold

________________________________

Estimated Inventory

 

3. Calculation of Gross Profit percentage                       

% Markup on Cost

1 + % Markup on Cost

- % of Gross Profit on Selling Price =

% Gross Profit on Selling Price

- Markup on Cost =

1 - % Gross Profit on Selling Price

 

4.  Retail inventory method of estimated inventory

 

 

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