ACCOUNTING FINAL EXAM PREP

Assets : Manufacturing Inventory (p. 370)
1) Draw T-accounts for Raw Materials, Work in Process, Finished Goods, Cost of Goods Sold, A/P
2) Assign accounts to the questions
3) Enter beginning and ending balances on debit side: RM, WIP, F/G, and credit side: A/P
4) For COGS: use formula:
Beginning Inventory + Purchases – Ending Inventories = COGS (alternatively)
COGS – Beginning Inventory + Ending Inventories = Purchases
5) If COGS is given, you can solve for Purchases, will become Raw Materials
6) If an initial assumption is given that anything else is debited from the WIP like “purchasing” labor (it is already included in COGS and must be subtracted from what you found for purchases).
7) That difference will be debited into Raw Materials and credited into Accounts Payable
8) When writing journal entries, go in this order: a) Purchases (from formula) b) Purchases (w/any stipulations) to A/P* b) Raw Materials Purchased c) Raw Materials to WIP d) WIP to Finished Goods e) Accounts Payable to Cash
*All purchases of Raw Materials must be made on account for this to work
9) At the end of balancing these COGS accounts, pay off A/P with Cash (if stated in her assumptions for account activity)

Assets : Accounts Receivable
1) Assign accounts to the questions
2) Draw T-accounts for A/R (or Trade A/R) and Allowance for Doubtful Accounts
3) All write-offs are credited from A/R and debited from Allowances (Notes - p.6 of Week 5) (p.319)
4) Treat the Allowance account like an Asset (if it’s in parentheses, it goes on Credit side of T account) 8) 5) When writing journal entries, go in this order: a) Sales
(Starts with 0 on credit side of T-account)
(If all sales made on account, debit A/R with the total Sales amount) b) Accounts Receivable (write-offs) b) Allowance