Documente Academic
Documente Profesional
Documente Cultură
Chapter
1. 2. 3. 4. 5. 6.
Identify the differences between service and merchandising companies. Explain the recording of purchases under a perpetual inventory system. Explain the recording of sales revenues under a perpetual inventory system. Explain the steps in the accounting cycle for a merchandising company. Prepare an income statement for a merchandiser. Explain the computation and importance of gross profit.
Merchandising Operations
Recording Purchases of Merchandise Freight costs Purchase returns and allowances Purchase discounts Summary of purchasing transactions
Completing the Accounting Cycle Adjusting entries Closing entries Summary of merchandising entries
Operating cycles Flow of costs costs perpetual and periodic inventory systems
Wholesaler
Retailer
Consumer
Gross Profit
Less
Cost of goods sold is the total cost of merchandise sold during the period.
Operating Expenses
The operating cycle of a merchandising company ordinarily is longer than that of a service company.
Slide 5-5
Slide 5-6
Slide 5-7
Slide 5-8
Made using cash or credit (on account). Normally recorded when goods are received. Purchase invoice should support each credit purchase.
journal entry Sauk Stereo would make to record its purchase from PW Audio Supply.
Seller places goods Free On Board the carrier, and buyer pays freight costs.
May 4
3,800 3,800
Seller places goods Free On Board to the buyers place of business, and seller pays freight costs.
Slide 5-11
Slide 5-12
SO 2
Assume the freight terms on the invoice in Illustration 5-5 had required PW Audio Supply to pay the freight charges, the entry by PW Audio Supply would have been: May 4
Slide 5-13
150 150
Slide 5-14
Return goods for credit if the sale was made on credit, or for a cash refund if the purchase was for cash.
Question
In a perpetual inventory system, a return of defective merchandise by a purchaser is recorded by crediting: a. Purchases b. Purchase Returns c. Purchase Allowance d. Merchandise Inventory
Answer on notes page Slide 5-15
Slide 5-16
1/10 EOM
1% discount if paid within first 10 days of next month.
n/10 EOM
Net amount due within the first 10 days of the next month.
Slide 5-18
Slide 5-19
Slide 5-20
Merchandise Inventory
Debit Credit
300
3,800
150
3,580
70
Slide 5-21
Slide 5-22
Made for cash or credit (on account). Normally recorded when earned, usually when goods transfer from seller to buyer. Sales invoice should support each credit sale.
SO 3 Explain the recording of sales revenues under a perpetual inventory system.
XXX XXX
Selling Price
#2
XXX XXX
Cost
Slide 5-23
Slide 5-24
would obscure importance of sales returns and allowances as a percentage of sales. could distort comparisons between total sales in different accounting periods.
Slide 5-25
Slide 5-26
May 8 May 8 Sales returns and allowances Accounts receivable 8 Merchandise inventory Cost of goods sold 140 140 300 300 8
Sales returns and allowances Accounts receivable Merchandise inventory Cost of goods sold
300 300 50 50
Slide 5-27
Slide 5-28
Review Question
The cost of goods sold is determined and recorded each time a sale occurs in: a. periodic inventory system only. b. a perpetual inventory system only. c. both a periodic and perpetual inventory system. d. neither a periodic nor perpetual inventory system.
Slide 5-29
Slide 5-30
Slide 5-32
Closing Entries
Slide 5-33
Slide 5-34
Slide 5-35
Slide 5-36
Operating Expenses
Slide 5-38
Interest Expense
Slide 5-40
SO 5
Illustration 5-13
SO 5
Illustration 5-13
Review Question
The multiple-step income statement for a merchandiser shows each of the following features except: a. gross profit. b. cost of goods sold. c. a sales revenue section.
Reported in a combined statement of net income and comprehensive income, or in a separate schedule that reports only comprehensive income.
Slide 5-41
Slide 5-43
Slide 5-44
Operating expenses Other income and expense Operating expenses Interest expense Current liabilities Property, plant, and equipment Current assets
Non-current liabilities Property, plant, and equipment Current liabilities Operating expenses Current liabilities Sales revenues Equity
Slide 5-47
Slide 5-48
SO 7 Explain the recording of purchases and sales of inventory under a periodic inventory system.
Slide 5-49
SO 7 Explain the recording of purchases and sales of inventory under a periodic inventory system.
Slide 5-50
SO 7 Explain the recording of purchases and sales of inventory under a periodic inventory system.
May 8
Accounts payable
300 300
Slide 5-51
SO 7 Explain the recording of purchases and sales of inventory under a periodic inventory system.
Slide 5-52
SO 7 Explain the recording of purchases and sales of inventory under a periodic inventory system.
No entry is recorded for cost of goods sold at the time of the sale under a periodic system.
Slide 5-54
Slide 5-53
SO 7 Explain the recording of purchases and sales of inventory under a periodic inventory system.
SO 7 Explain the recording of purchases and sales of inventory under a periodic inventory system.
Slide 5-55
SO 7 Explain the recording of purchases and sales of inventory under a periodic inventory system.
Slide 5-56
SO 7 Explain the recording of purchases and sales of inventory under a periodic inventory system.
Slide 5-57
SO 7 Explain the recording of purchases and sales of inventory under a periodic inventory system.
Slide 5-58
SO 7 Explain the recording of purchases and sales of inventory under a periodic inventory system.
SO 8