Accounting Final Chapter 5,6,9

Front 1

Purchase of Inventory

Back 1

Inventory x
Accounts Payable x

Front 2

Purchase Discounts

Back 2

Accounts Payable x
Cash($ x %) x
Inventory ($ x %) x

Front 3

Paid after discount period

Back 3

Accounts Payable x
Cash x

Front 4

Purchase Returns & Allowances

Back 4

Accounts Payable x
Inventory x

Front 5

Freight In

Back 5

Inventory x
Cash x

***freight in is debited to inventory***

Front 6

Summary of Purchase Returns & Allowances, discounts, and Transportaion costs

Back 6

Inventory - Purchase Returns & Allowances - Purchase discounts + freight in = Inventory

Front 7

Cash Sale

Back 7

Cash x
Sales Revenue x

Cost of Goods Sold x
Inventory x

Front 8

Sale on Account

Back 8

Accounts Receivable x
Sales Revenue x

Cost of Goods Sold x
Inventory x

Front 9

Collection on Account

Back 9

Cash x
Accounts Receivable x

Front 10

Sales Discounts and Sales returns and Allowances

Back 10

Sales Revenue - Sales returns & Allowances - Sales Discounts = Net Sales Revenue

Front 11

Sales Returns

Back 11

Sales returns & allow. x
Accounts Receivable x

Iventory x
Cost of Goods Sold x

****SRA reduces accounts receivable****

Front 12

Sales Allowances

Back 12

Sales returns & allow. x
Accounts receivable x

****no inventory entry for sales allowance b/c the seller receives no returned goods from customer***

Front 13

Sales Discounts

Back 13

Cash x
Sales Discount($ x %) x
Accounts Receivable x

Front 14

Sales Revenue, cost of goods sold, and gross profit

Back 14

Net sales - cost of goods sold = gross profit

Front 15

Adjusting Inventory Based on a Physical Count

Back 15

Inventory Balance B4 Adjustment - Actual Inventory on Hand = Adjusting Entry To Inventory

Cost of Goods Sold x
Inventory x

Front 16

Closing Accounts of a Merchandiser

Back 16

* debit all revenue accounts for their credit balances
* credits Income Summary for total revenues

* debit Income suammry for total expenses + contra revenues

* credits the contra revenues (SD & SRA) and all expenses for their debit balances.

*close net income frim I/S to Capital Account

*Close W/D inot capital accounts

Front 17

Multi-step income statement

Back 17

Sales Revenue x
Less: SD x
SRA x (x)
______________________________
Net sales revenue x
Cost of Goods Sold x
______________________________
Gross Profit x
Operating Expenses:
expense x
expense x
expense x (x)
______________________________Operating Income: x
Other revenue & expenses:
Interset Expense (x)
_____________________________
Net Income x

Front 18

Gross Profit Percentage Ratio

Back 18

Gross Profit Percentage=
gross profit/net sales rev

Front 19

Rate of Inventory Turnover

Back 19

inventory turnover= cogs/avg inventory = cogs/(beg. inv + end inv)/2

Front 20

FIFO journal entry

Back 20

Inventory
A/P
purchase inv on account

A/R
Sales Rev
sale on account
COGS
Inv
Inv
A/P
purchase inv on account

A/R
Sales Rev
sale on account
COGS
Inventory

Front 21

Average Cost method

Back 21

Total cost of inventory on hand / number of units = avg cost per unit

Front 22

Accunting for Uncollectibles (Bad Debts)-
THE ALLOWANCE METHOD

Back 22

Balance sheet (partial):
A/R..................2,800
Less: allow for BDE...(400)
accounts receivable
net..................$2,400
****interpretation: customers owe In Motion $2,800, of which you expect to collect $2,400. You estimatethat In Motion will not collect $400 of these receivables.****

Front 23

Estimating Uncollectibles: Percent of Sales

Back 23

Uncollectible-Acct Exp x
Allow. for uncoll. acct x
***this is an adjusting entry***

Front 24

Estimating Uncollectibles:
aging-of-accounts receivable
(balance sheet approach)

Back 24

Allowance for Uncollectible Accounts:

Credit balance Needed $400
Unadj. bal in allowance $100
adjusting entry for amt $300

journal entry:
Uncollect. Acct. Exp. 300
Allowance BDE 300

Front 25

Writing off Uncollectible Accounts

Back 25

Cash x
A/R x
collected on account

Allowance for BDE x
A/R x
wrote off uncollectible debts

Front 26

Direct Write-off Methods

****wait until u decide that you will never collect from the customer****

Back 26

Uncoll acct. exp x
A/R-name x
wrote off a bad account

Front 27

Recovery of Accts Previously wriiten off

***make two journal entries***

Back 27

A/R- Name x
Allow for uncoll x
reinstate A/R

Cash x
A/R-Name x
collected on account

Front 28

Notes Receivable:
Identifying maturity date

Back 28

When the period is given in days, the maturity date is determined by counting the days from date of issue.

Front 29

Computing interest on a note

Back 29

amount of interest =
princial x intereste rate x time

example: interest rev for1 yr

$90= $1,000 x 0.09 x 1yr

Front 30

Accounting for Notes Receivable- LOAN OUT MONEY

Back 30

Note Receivable-Name
Cash
loaned out money

Cash
Note Receivable-name
Interest Rate
collected note receivable

Front 31

Accounting for Notes Receivable-
SELL A NOTE ON ACCOUNT

Back 31

Note receible-Name
Sales Revenue
made a sale

Cash
Note Receivable-name
Interest Revenue(200 x 0.10 x 90/360)
collected notes receivable

Front 32

Accounting for Notes receivable-
NOTE RECEIVABLE ON ACCOUNT

Back 32

Note Receivable-name
A/R- name

Front 33

Accruing Interest Revenue

**a note receivable may be outstanding at the end of an acctg period.**** the interest revenue earned on the note up to the year end is part of that year's earnings.

Back 33

Interest Recev (400x.09x3/12)
Interest rev
accrued interest revenue

On notes maturity date:

Cash (4000+(4000x.09)
N/R-name
Interest Rec(4000x.09x3/12)
Interest Rev(4000x.09x9/12)

Front 34

Dishonered Notes Receivable

Back 34

A/R-name
Note Receivable- Name
Interest Rev
recorded a dishonered note receivable

Front 35

Reporting Receivables on Balance Sheet

Back 35

A/R.....................$2800
Less: allow. for uncollectible accounts...(400)
A/R, net.................$2400

Front 36

Balance Sheet

Back 36

Current Assets:
Cash
Short-term invest
A/R, net of allow
Inventory
Total current assets
Liabilities
Current Liabilities:
Total current liabilities