ACCY 202 1st Edition Lecture 7Outline of Last LectureI. Debits vs. Credits1. General RuleA. DebitsB. CreditsII. Balance Sheet  Income Statement1. Cash/Accounts Receivable2. InventoryIII. Contra Revenue Accounts1. Sales Returns & Allowances2. Sales Discounts3. Credit Card Service FeesIV. Gross Profits1. Definition2. Also Known AsOutline of Current LectureI. Sellers Perspective1. Seller EventsA. Record SaleB. Record FreightC. Record ReturnedD. Record CashII. Sales ReturnsIII. Sales AllowancesIV. Slide Page 83V. Recording Sales at Specific Prices1. Calculate2. Specification MethodA. Bucket 1B. Bucket 2VI. FIFO1. Uses Items That…VII. LIFOThese 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.1. Uses Items That….2. Why Use LIFO?VIII. Perpetual System Method1. CalculationsCurrent LectureI. Sellers Perspective1. Seller EventsA. Record sale of inventory at negotiated priceB. Record freight and other selling expenseC. Record returned merchandise or price allowancesD. Record Cash receiptII. Sales Returns- Merchandise is returned by the customer to the sellerIII. Sales Allowances- A reduction in the selling price charged for the merchandiseIV. Slide Page 83- Serial #’s are like a social security number for inventory- Cost = negotiated price- Inventory sales = Sales priceV. Recording Sales at Specific Prices1. Calculate- Multiply the amount of units times the price at that date and you will get the total value of the goods at that time. Then add them all up- On exam the teacher will tell us the number of goods available for sale2. Specification Method- Tells us which of the units were sold and whenA. Bucket 1 = Cost of Goods Sold I/S- The units still on hand in ending inventoryB. Bucket 2 = Ending inventory B/S - The units that were already soldVI. FIFO1. Uses items that were purchased at the latest date. Basically utilizing food that can easily spoil, firstVII. LIFO1. Uses items that were put in stock most recently, first2. Why use LIFO?  Allowed by GAAP, LIFO conformity Rule is for tax purposesVIII. Perpetual System Method1. Calculations- Under this method we calculate the COGS on each date of sale, one by one.- Everything must be kept in