Which financial statement is prepared last


17) Which financial statement is prepared last? A) statement of retained earnings B) income statement Q) balancesheet D) The financial statements can be prepared in any order 17) 18) Net sales revenue is calculated by 15) A) subtracting sales discounts and estimated sales returns and allowances from sales revenue B) subtracting cost of goods sold from sales revenue C subtracting sales discounts and selling expenses from sales revenue D) adding sales discounts and sales returns and allowances to sales revenue 19) Which of the following is the correct formula to calculate weighted- average unit cost for 19) merchandise inventory? A) Weighted- average unit cost -Cost of goods available for sale x Number of units available B) Weighted-average unit cost Cost of goods available for sale/Number of units available O Weighted- average unit cost Cost of goods available for sale+ Number of units available D) Weighted-average unit cost Cost of goods available for sale- Number of units available 20) 20) Which of the following items must be examined by the controller or treasurer before signing a check? A) the journal entry C) the confirmation report B) the ledger D) the purchase order 21) 21) At the beginning of 2019, Patriots, Inc. has the following account balances: Accounts Receivable $45,000 (Debit) Allowance for Bad Debts $8000 (Credit) Bad Debts Expense s0 During the year, credit sales amounted to $810,000, Cash collected on credit sales amounted to $770,000, and $18,000 has been written off. At the end of the year, the debts expense using the percent- of- sales method and applied a rate, based on past hist The amount of bad debts expense for 2019 is company adjusted for bad ory, of 3.5%. B) $18,350 C) $28,350 D) $56,875 A) $18,000

Answer

General guidance

Concepts and reason

Balance sheet: Balance sheet is one of the financial statement of the company which shows the financial position of the company as on date. It shows the assets which company owns and liabilities which company owes as on particular date. Balance sheet of the company helps to understand the liquidity and solvency position of the company that is whether the company has sufficient liquid assets to pay the liabilities and whether company has enough funds to make payment of its debt obligations. Income statement: Income statement is another financial statement prepared by the company. This financial statement consists of details of income and expenses made during the year. The income statement tells about the net earnings made by the company which is calculated as total income less total expenses during the year. If the income is more than expenses then company would have net profit and if income is less than the expenses then company would have net loss. Statement of retained earnings: The statement of retained earnings shows the changes made to retained earnings during the year. The changes in retained earnings could be due to addition of current year income or dividend paid by the company to its shareholders.

Fundamentals

Service revenue or sales revenue: Revenue is the income earned by the company by providing service or selling goods to its customers. Revenue is recognized by the company when it fulfils its performance obligation of either selling goods or providing services. The higher the income, higher would be the cash inflow for the company to finance its future operation. Weighted average inventory valuation method: Under this method, inventory is valued based on weighted average cost of purchases. In this method, weighted average per unit is calculated which is multiplied by ending inventory in units to calculate value of inventory.

Step-by-step

Step 1 of 3

Financial statement are prepared in sequence by company with the help of adjusted trial balance. Company first prepares income statement, it then prepares statement of retained earnings and at last company prepares balance sheet as on date. Thus, balance sheet is prepared last by company.

Balance sheet financial statement are prepared last by company.


Company prepares first income statement which shows revenue and expenses during the year and calculates net income for the year. The net income of company is transferred to retained earnings and therefore retained earnings is prepared second by company. Statement of retained earnings is prepared to calculate the increase or decrease in retained earnings during the year. Balance sheet of company is prepared last which shows financial position of assets and liabilities and equity. Balance sheet of company is complete when all accounts are reflected and therefore balance sheet is prepared last by company.

Step 2 of 3

Net sales revenue is sales net of any sales discounts and sales return by customer. Net sales revenue is therefore calculated as sales revenue less sales discounts and estimated sales return and allowance. Thus, net sales revenue is calculated by subtracting sales discounts and estimated sales returns and allowances from sales revenue.

Net sales revenue is calculated by subtracting sales discounts and estimated sales returns and allowances from sales revenue.


Net sales revenue are net sales earned by company after deducting sales discounts and sales return made by customer if any. Sales revenue less cost of goods sold provides gross profit of business and selling expenses is part of total business expense and is not netted off from sales revenue. Net sales revenue is calculated as total sales for the year less sales discount which would reduce value of revenue less goods returned by customer less allowance which company provides to customer.

Step 3 of 3

Weighted average unit cost is average unit cost of purchases made by company which is calculated as total costs of goods which are available for sales divided by number of units of goods available for sale.

Thus, weighted average unit cost = Cost of goods available for sale/Number of units available.

The weighted average unit cost for merchandise inventory = Cost of goods available for sale/Number of units available.


Weighted average unit cost is used to calculate the weighted average value of inventory. Weighted average unit cost is calculated as total goods available for sale which includes beginning inventory plus all purchases made by company during the year. This total costs is divided by number of units available for sale which would give average unit price of a unit purchased by company.

Answer

Balance sheet financial statement are prepared last by company.

Net sales revenue is calculated by subtracting sales discounts and estimated sales returns and allowances from sales revenue.

The weighted average unit cost for merchandise inventory = Cost of goods available for sale/Number of units available.

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