Some Important Questions

[dunno2012]

Hey guys, I just have a few questions

1) So when recording the deposit of sale being earned, what date should u record it on? Our school said to record it on the last day of the reporting period but other schools are saying to do it on the date that the goods are delivered (this is how most practice exams do it). So what are ur thoughts on this?

2) When doing an inventory gain using FIFO, some of the exams I have done go back to the latest purchase in the IN column and use that cost but in the textbook, they say to use the latest cost in the IN column (which could be from a sales return as well). Which brings me to my third question

3) Does the order of a sales return recorded in the IN column matter?, because either order u pick would affect ur inventory gain according to the textbook.

[Seamus Wong]

Hey guys, I just have a few questions

1) So when recording the deposit of sale being earned, what date should u record it on? Our school said to record it on the last day of the reporting period but other schools are saying to do it on the date that the goods are delivered (this is how most practice exams do it). So what are ur thoughts on this?

2) When doing an inventory gain using FIFO, some of the exams I have done go back to the latest purchase in the IN column and use that cost but in the textbook, they say to use the latest cost in the IN column (which could be from a sales return as well). Which brings me to my third question

3) Does the order of a sales return recorded in the IN column matter?, because either order u pick would affect ur inventory gain according to the textbook.

1. You should record it on the date that the sale was made, not at the end of the reporting period, since you have a source document to verify the transaction on the particular date.

2. Inventory Gains - The last units purchased are recorded as the inventory gain (LIFI - Last in First in) [A teacher who actually helped in writing the study design for accounting told me this btw, so I would be confident that it is the correct way to record inventory gains]

3. The cost of the sales returns are ALWAYS provided in the credit note that the business supplies to the customer, regardless of which cost assignment method is used.

Hope this helps

[dunno2012]

1. You should record it on the date that the sale was made, not at the end of the reporting period, since you have a source document to verify the transaction on the particular date.

2. Inventory Gains - The last units purchased are recorded as the inventory gain (LIFI - Last in First in) [A teacher who actually helped in writing the study design for accounting told me this btw, so I would be confident that it is the correct way to record inventory gains]

3. The cost of the sales returns are ALWAYS provided in the credit note that the business supplies to the customer, regardless of which cost assignment method is used.

Hope this helps

Thanks a lot, with the 3rd question, so ur saying that the cost price will be identified on the credit note? what if they don't give any source docs and ask u to record it. I am asking because I used to do the reverse FIFO rule (when FIFO is the cost allocation method) where u start from the last cost in the OUT column and go upwards.

and also, just to confirm the second one, we should go back the last purchase in the IN column right for the inventory gain?

[Seamus Wong]

Thanks a lot, with the 3rd question, so ur saying that the cost price will be identified on the credit note? what if they don't give any source docs and ask u to record it. I am asking because I used to do the reverse FIFO rule (when FIFO is the cost allocation method) where u start from the last cost in the OUT column and go upwards.

and also, just to confirm the second one, we should go back the last purchase in the IN column right for the inventory gain?

all g man.

They will ALWAYS give u source doc (credit note)

And yes, you're right, we go back to the last purchase in the IN column for the inv gain.