Accounting Exam 2

Bad debt loss rate

Previous bad debt losses/previous credit sales

Bad debt expense

Credit sales * bad debt loss rate

Net Realizable Value of Accounts Receivable

AR - Allowance for doubtful accounts

Receivables turnover

Net (credit) sales/ avg net trade accounts receivable

Avg collection period

365/ receivables turnover

COGS

beg inventory + purchases - ending inventory. Also #units sold * Cost/unit

Goods available for sale

Beginning inventory + cost of goods purchased

Net book value

Acquisition cost - accumulated depreciation

Depreciation expense (straight line)

(cost-residual value) * 1/useful life

Depreciation expense (units of production)

(cost- residual value)/estimate total production * actual production

Depreciation expense (declining balance)

(cost - acc depreciation) * rate/useful life

Gain (loss) on sale of asset

Compensation received - net book value

Revised depreciation expense

(net book value - new residual value) * 1/remaining life

Depletion

(cost - residual value)/ estimated total depletion * actual depletion

Goodwill

Purchase price - fair market value of net assets (assets - liabilities)

Net sales revenue

Gross Profit + COGS

Gross Profit

Net sales revenue - COGS

Years used (depreciation)

Accumulated depreciation/annual depreciation expense