Page 35 - MAZOO EBOOK 1_Neat

200 shirts at $20

At the end of the month, the business had sold 50 shirts.

With FIFO, we use the costing from our first transaction when we purchased 100 shirts at $10

each.

So, after selling 50 shirts:

COGS = (50 shirts x $10 FIFO cost) = $500

50 shirts from the first purchase are still left on the shelves, costed at $10 each, as well as the

remaining 200 shirts from the second purchase at $20 each. So:

Remaining inventory value = (50 shirts x $10 cost) + (200 shirts at $20 cost) = $4,500 (31)

Trade receivables - bad debts and allowance for doubtful debts and receivables control

accounts

Amount owed by customers is called trade receivables. To control the Sales Ledger, the Trade

Receivables Control Account is prepared. It is often called Receivables Control Account.

Purchases Ledger (Payables Ledger) is the book in which accounts of credit suppliers are kept.

Bad debts and allowance for doubtful debts

34