Answer for Chapter7 Receivables

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1、CHAPTER7ReceivablesKEYTERMaveragecostmethodThemethodofinventorycostingthatisbasedupontheassumptionthatcostsshouldbechargedagainstrevenuebyusingtheweightedaverageunitcostoftheitemssold.first-in,first-out(FIFO)methodThemethodofinventorycostingbasedontheassumptiontha

2、tthecostsofmerchandisesoldshouldbechargedagainstrevenueintheorderinwhichthecostswereincurred.grossprofitmethodAmethodofestimatinginventorycostthatisbasedontherelationshipofgrossprofittosales.inventoryturnoverTherelationshipbetweenthevolumeofgoodssoldandinventory,c

3、omputedbydividingthecostofgoodssoldbytheaverageinventory.last-in,first-out(LIFO)methodAmethodofinventorycostingbasedontheassumptionthatthemostrecentmerchandiseinventorycostsshouldbechargedagainstrevenue.lower-of-cost-or-market(LCM)methodAmethodofvaluinginventoryth

4、atreportstheinventoryatthelowerofitscostorcurrentmarketvalue(replacementcost).netrealizablevalueTheestimatedsellingpriceofanitemofinventorylessanydirectcostsofdisposal,suchassalescommissions.numberofdays’salesininventoryTherelationshipbetweenthevolumeofsalesandinv

5、entory,computedbydividingtheinventoryattheendoftheyearbytheaveragedailycostofgoodssold.physicalinventoryAdetailedlistingofmerchandiseonhand.retailinventorymethodAmethodofestimatinginventorycostthatisbasedontherelationshipofgrossprofittosales.KEYPOINT1.Journalizeth

6、eentriesfortheallowancemethodofaccountingforuncollectibles,andestimateuncollectiblereceivablesbasedonsalesandonananalysisofreceivables.Ayear-endadjustingentryprovidesfor(1)thereductionofthevalueofthereceivablestotheamountofcashexpectedtoberealizedfromtheminthefutu

7、reand(2)theallocationtothecurrentperiodoftheexpectedexpenseresultingfromsuchreduction.TheadjustingentrydebitsUncollectibleAccountsExpenseandcreditsAllowanceforDoubtfulAccounts.Whenanaccountisbelievedtobeuncollectible,itiswrittenoffagainsttheallowanceaccount.Whenth

8、eestimateofuncollectiblesisbasedontheamountofsalesforthefiscalperiod,theadjustingentryismadewithoutregardtothebalanceoftheallowanceaccount.Whentheestima