ACCT 201 1st Edition Lecture 21Outline of Last Lecture I. Recording Bad Debt ExpenseII. Recording a Write-ofOutline of Current LectureIII. Exam ReviewCurrent LectureChapter Five:Inventory—Merchandising company- Perpetual inventory system—real time, inventory account for purchases- Periodic inventory system—adjusted, purchases account for new inventoryWhen inventory sells, there are two entries:A = L + SE+ Cash/AR +Revenue (Sales $)- Inventory -COGS (Purchase $) = Gross ProfitChapter Six:Inventory Count1. Physical count (what’s in front of you)2. Goods in transit (being shipped)- FOB shipping point—buyer pays- FOB destination—seller pays3. Consigned Goods—ownership does not change handsInventory Methods1. FIFO—first in, first out (oldest) highest profit2. LIFO—last in, first out (newest)These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.3. Average cost—weighted average Specific identification: high value, low volumeEx: cars, jewelryA/R --$ full amountLess (Allowances): $ assume not collect contra asset*Almost always a percentage, usually included with all other adjusted entriesA/R (Net) $ we might actually get --- Net Realizable Value (NRV)A = L + SE-Allowance -Bad Debt
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