Chapter 5 and 6 Flashcards
Net Revenue formula
Credit Sales
Transfer of product and services to a customer today while bearing the risk of collecting payment from that customer in the future
Trade Discounts
a reduction in the listed price of a product or service
Sales return
when a customer returns a product
Sales Allowance
Any partial refund without the customer returning the product or offering an allowance such as store credit
Contra Revenue Account
opposite or contra to that of its related revenue account (sales allowance)
Sales discount
reduction in the amount to be paid by a credit customer if payment is made within a specified period of time
Physicians’ Hospital has the following balances on December 31, 2018, before any adjustment: Accounts Receivable = $45,000; Allowance for Uncollectible Accounts = $1,000 (credit). On December 31, 2018, Physicians’ estimates uncollectible accounts to be 20% of accounts receivable.
Record the adjustment for uncollectible accounts on December 31, 2018.
T- Account
Allowance Uncollectiable Assets
Credit
$1000 intial +
$8000 Adjustment =
$9000 estimated
Physicians’ Hospital has the following balances on December 31, 2018, before any adjustment: Accounts Receivable = $45,000; Allowance for Uncollectible Accounts = $1,000 (credit). On December 31, 2018, Physicians’ estimates uncollectible accounts to be 20% of accounts receivable
Determine the amount at which bad debt expense is reported in the income statement and the allowance for uncollectible accounts is reported in the balance sheet.
Physicians’ Hospital has the following balances on December 31, 2018, before any adjustment: Accounts Receivable = $45,000; Allowance for Uncollectible Accounts = $1,000 (credit). On December 31, 2018, Physicians’ estimates uncollectible accounts to be 20% of accounts receivable
Calculate the net realizable value of accounts receivable.
Total Account Receviable - Uncollectiable Allowance Account = Net realizable Value
Southwest Pediatrics has the following balances on December 31, 2018, before any adjustment: Accounts Receivable = $113,000; Allowance for Uncollectible Accounts = $1,900 (debit). On December 31, 2018, Southwest estimates uncollectible accounts to be 15% of accounts receivable.
Record the adjustment for uncollectible accounts on December 31, 2018
Southwest Pediatrics has the following balances on December 31, 2018, before any adjustment: Accounts Receivable = $113,000; Allowance for Uncollectible Accounts = $1,900 (debit). On December 31, 2018, Southwest estimates uncollectible accounts to be 15% of accounts receivable.
Determine the amount at which bad debt expense is reported in the income statement and the allowance for uncollectible accounts is reported in the balance sheet.
Southwest Pediatrics has the following balances on December 31, 2018, before any adjustment: Accounts Receivable = $113,000; Allowance for Uncollectible Accounts = $1,900 (debit). On December 31, 2018, Southwest estimates uncollectible accounts to be 15% of accounts receivable.
Calculate Net Realizable Value
Estimate the amount of uncollectible receivables.
Take percentage of all the receivables and add them up
Record the adjustment for uncollectible accounts on December 31, 2018
Adjustment of journal, 11,160 - 1400(credit) = adjustment of bad debts and uncollectible accounts
When debit of a bad debt expense how should the formulation go?
Formulation of Uncollectible Credit
What is the Formulation for Receivable Turnover Ratio?
Determining Average Account Receivables?
Determining Average Collection Period
When debit of a bad debt expense how should the formulation go?
Formulation of Uncollectible Credit
What is the Formulation for Receivable Turnover Ratio?
Determining Average Account Receivables?
Determining Average Collection Period
Cost of Goods Sold measurement?
The cost inventory of the firm that was sold
What is perptual inventory system
recording inventory purchase and sales on a perpetual (continual) basis
what is periodic inventory system
calculates the balance of inventory once per period at the end based on physical count of inventory
what is FOB shipping?
title transfer when item shipped from seller to to buyer
What is FOB destination ?
Title transfer when buyer receives the items
Defintion of Freight out?
charges for outgoing inventory reported in the income statement either as part of cost of good sold or as an operating expense, usually among selling expense
What is freight in?
Freight is part of the inventory cost later when sold freight becomes part of COGS reported in the income statement
Inventory turnover ratio
COGS / Average inventory (B - E)
Good Avaliable for Sale
Beginning Inventory + Cost of inventory purchased
COGS?
(Beginning Inventory + Cost of goods purchased (Goods avaliable for sale) ) - ending inventory
What is the gross profit ratio?
(Gross Profit) / (Net Sales)
Gross Profit Formula?
Net Sales - COGS
Operating Expenses?
Recorded on an income statement it’s the expense for selling, general and admin expenses.
Return on asset
Net Income / Average Total Asset
N.I / ATA
Asset Turnover ratio
Net Sales / Average Total Asset
N.S. / A.T.A
Profit Margin Ratio
Net Income / Net Sales
N.I. / N.S.
Capitalize
Recording an expenditure as an asset
Amortization
Allocating the cost of intangible assets to expense
Reverse
recording inventory purchase and sales on a perpetual (continual) basis
What is perptual inventory system
Reverse
calculates the balance of inventory once per period at the end based on physical count of inventory
what is periodic inventory system
Reverse
title transfer when item shipped from seller to to buyer
what is FOB shipping?
Reverse
Title transfer when buyer receives the items
What is FOB destination ?
Reverse
charges for outgoing inventory reported in the income statement either as part of cost of good sold or as an operating expense, usually among selling expense
Defintion of Freight out?
Reverse
Freight is part of the inventory cost later when sold freight becomes part of COGS reported in the income statement
What is freight in?
Reverse
COGS / Average inventory (B - E)
Inventory turnover ratio
Reverse
Beginning Inventory + Cost of inventory purchased
Good Avaliable for Sale
Reverse
(Beginning Inventory + Cost of goods purchased (Goods avaliable for sale) ) - ending inventory
COGS?
Reverse
(Gross Profit) / (Net Sales)
What is the gross profit ratio?
Reverse
Net Sales - COGS
Gross Profit Formula?
Reverse
Recorded on an income statement it’s the expense for selling, general and admin expenses.
Operating Expenses?
Reverse
Net Income / Average Total Asset
N.I / ATA
Return on asset
Reverse
Net Sales / Average Total Asset
N.S. / A.T.A
Asset Turnover ratio
Reverse
Net Income / Net Sales
N.I. / N.S.
Profit Margin Ratio
Reverse
Recording an expenditure as an asset
Capitalize
Reverse
Allocating the cost of intangible assets to expense
Amortization
