FA Week 5 - Inventory COGS

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School
National University of Singapore **We aren't endorsed by this school
Course
ACCT 111
Subject
Accounting
Date
Jul 12, 2023
Pages
26
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ACCT 111 Financial Accounting Week 5 Inventory & Cost of Goods Sold Samuel Tan Assistant Professor of Accounting Admin Stuff Remember that Test 1 is at 26 Sep 10am Held online, via eLearn > Quizzes I'll give you an example of the format closer to Test 1 Extended office hours for Test 1 23 Sep Wednesday, 1:30pm-3:30pm, on Zoom I've posted Practice Test B for your own practice Simple questions you can do after this week I might go over it next week if there are FAQ Week 4 takeaways: bank reconciliation Adjusting the book balance requires journal entries: if "Add": debit cash if "Less": credit cash Adjustments to the bank balance Adjustments to the book balance Add Deposits in transit Add Bank collections Less Outstanding checks Add/Less Electronic fund transfers Add/Less Bank errors Less Non-sufficient funds checks Add Interest revenue Less Bank service charges Add/Less Book errors Week 4 takeaways: the allowance method 1. Estimate the total amount of bad debt , e.g. using an Aging Schedule 2. Recognize an allowance to ensure that the total allowance equals the estimated bad debt: 3. When an amount actually cannot be collected , "use up" the allowance and reduce accounts receivable: Debit Credit Bad Debt Expense ### Allowance for Doubtful Accounts ### Recorded estimated bad debt Debit Credit Allowance for Doubtful Accounts ### Accounts Receivable ### Writing off a bad debt
Week 4 takeaways: aging schedule To estimate the dollar amount of uncollectible debt Age of Account Customer Not due 1-60 days 61-180 days > 180 days Totals BreadWalk $1,000 - - - $1,000 Wish&Co $500 $100 $200 - $800 Unpopular - - $200 $300 $500 Totals $1,500 $100 $400 $300 $2,300 % Uncollectible 1% 10% 25% 50% Req'd Allowance $15 $10 $100 $150 $275 Week 4 takeaways: notes receivable 1 April : BreadWalk lends John Lim $10,000, and John sends BreakWalk a 4-month, 12%, promissory note. 31 July : John repays the note with interest Debit Credit 1 Apr Notes Receivable 10,000 Cash 10,000 Made a loan Debit Credit 31 July Cash 10,400 Notes Receivable 10,000 Interest Revenue (10,000 x 12% x 4/12) 400 Collected note at maturity Workbook 1 Q4-7 I know these questions were tough... Test 1 should be easier and more straightforward Yes, the bank reconciliation questions are very difficult There are many ways BR questions can be asked! Practice Test B has another (much easier) format you may encounter: I'll explain this format... Workbook 1: Q4 Part I Bank Reconciliation, May 31 Bank Balance, May 31 21,422 Adjusted bank balance Books Balance, May 31 27,404 Adjusted book balance Book balance = 17,150 + 64,000 - 53,746 = 27,404
Workbook 1: Q4 Part I Bank Reconciliation, May 31 Bank Balance, May 31 21,422 Deposits in transit 10,450 Outstanding checks Adjusted bank balance Books Balance, May 31 27,404 Collection of note 2,500 Interest revenue (30 + 45) 75 NSF check (425) Safe deposit rent (65) Book error (90) Adjusted book balance Wrong entry: Dr Cash 1,324 Cr A/R 1,324 Correct entry: Dr Cash 1,234 Cr A/R 1.234 Correction: Dr A/R 90 Cr Cash 90 Remember to do journal entries for all the adjustments to the book! Workbook 1: Q4 Part I Bank Reconciliation, May 31 Bank Balance, May 31 21,422 Deposits in transit 10,450 Outstanding checks (2,473) Adjusted bank balance 29,399 Books Balance, May 31 27,404 Collection of note 2,500 Interest revenue (30 + 45) 75 NSF check (425) Safe deposit rent (65) Book error (90) Adjusted book balance 29,399 Workbook 1: Q4 Part II August deposits recorded on the books = $15,750 Remember... what are deposits in transit? When deposits are recorded on the books but not the bank! August deposits recorded on the bank statement = $15,600 (from August + July) - $920 (from July) = $14,680 Deposits in transit on 31 August = $15,750 - $14,680 = $1,070 Book deposits Bank deposits - previous DIT Workbook 1: Q4 Part II August payments recorded on the books = $17,200 Remember... what are outstanding checks? When payments are recorded on the books but not the bank! August payments recorded on the bank statement = $16,400 (from August + July) - $680 (from July) = $15,720 Outstanding checks on 31 August = $17,200 - $15,720 = $1,480 Book payments Bank payments - previous OC
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