Lecture Accounting principles (8th edition) – Chapter 5: Accounting for merchandising operations

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Lecture Accounting principles (8th edition) – Chapter 5: Accounting for merchandising operations

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In this chapter, the learning objectives are: 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.

Chapter 5-1 CHAPTER  ACCOUNTING FOR MERCHANDISING OPERATIONS Accounting Principles,  Eighth Edition Chapter 5-2 Study Objectives Study Objectives 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 Distinguish between a multiple­step and a single­step income statement Explain the computation and importance of gross profit Determine cost of goods sold under a periodic system Chapter 5-3 Accounting for Merchandising Operations Accounting for Merchandising Operations Merchandising Merchandising Operations Operations Operating cycles Inventory systems— perpetual and periodic Chapter 5-4 Recording Recording Purchases Purchasesof of Merchandise Merchandise Recording Recording Sales Salesof of Merchandise Merchandise Completing Completingthe the Accounting Accounting Cycle Cycle Freight costs Purchase returns and allowances Purchase discounts Summary of purchasing transactions Sales returns and allowances Sales discounts Adjusting entries Closing entries Summary of merchandising entries Forms Formsof of Financial Financial Statements Statements Multiple-step income statement Single-step income statement Classified balance sheet Determining cost of goods sold under a periodic system Merchandising Operations Merchandising Operations Merchandising Companies Buy and Sell Goods  Wholesaler Retailer Consumer The primary source of revenues is referred to as                    sales revenue or  sales Chapter 5-5 LO 1  Identify the differences between service and merchandising companies Merchandising Operations Merchandising Operations Income Measurement Sales Revenue Not used in a Service  business Less Cost of  Goods Sold Equals Cost of goods sold is the total cost of  merchandise sold during the period Chapter 5-6 Gross  Profit Illustration 5­1 Less Operating  Expenses Equals Net  Income  (Loss) LO 1  Identify the differences between service and merchandising companies Operating Cycles Operating Cycles Illustration 5­2 The operating cycle of  a merchandising  company ordinarily  is longer than that of  a service company Chapter 5-7 LO 1  Identify the differences between service and merchandising companies Inventory Systems Inventory Systems Perpetual System   Features: Purchases increase Merchandise Inventory Freight costs, Purchase Returns and Allowances and Purchase Discounts are  included in Merchandise Inventory Cost of Goods Sold is increased and Merchandise Inventory is decreased for  each sale Physical count done to verify Merchandise Inventory balance The perpetual inventory system provides a continuous record of Merchandise  Inventory and Cost of Goods Sold Chapter 5-8 LO 1  Identify the differences between service and merchandising companies Inventory Systems Inventory Systems Periodic System   Features: Purchases of merchandise increase Purchases Ending Inventory determined by physical count Calculation of Cost of Goods Sold: Beginning inventory $ 100,000 Add: Purchases, net Chapter 5-9 800,000 Goods available for sale LO 1  Identify the differences between service and merchandising companies Recording Purchases of Merchandise Recording Purchases of Merchandise Made using cash or credit (on account) Illustration 5­4 Normally recorded when                                  goods are received Purchase invoice should                                    support each credit                                    purchase Chapter 5-10 LO 2  Explain the recording of purchases under a perpetual inventory system Illustration 5­11 Forms of  Forms of  Financial  Financial  Statements Statements Key Items: Net sales Gross profit Gross profit rate Operating expenses Nonoperating  activities Net income Chapter 5-42 LO 5  Distinguish between a multiple­step and a single­step income statement Forms of Financial Statements Forms of Financial Statements Review Question The multiple­step 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 d investing activities section Chapter 5-43 LO 5  Distinguish between a multiple­step and a single­step income statement Forms of Financial Statements Forms of Financial Statements Single­Step Income Statement Subtract total expenses from total revenues Two reasons for using the single­step format:  1) Company does not realize any type of profit until total  revenues exceed total expenses.  2) Format is simpler and easier to read Chapter 5-44 LO 5  Distinguish between a multiple­step and a single­step income statement Forms of Financial Statements Forms of Financial Statements Illustration 5­12 Single­ Step Chapter 5-45 LO 5  Distinguish between a multiple­step and a single­step income statement Forms of Financial Statements Forms of Financial Statements Classified Balance Sheet Chapter 5-46 Illustration 5­13 LO 5  Distinguish between a multiple­step and a single­step income statement Calculation of  Calculation of  Gross Profit Gross Profit Illustration 5­11 Key Items: Net sales Gross profit Gross profit rate Illustration 5­8 Chapter 5-47                   LO 6  Explain the computation and importance of gross profit Determining Cost of Goods Sold Under a Periodic  Determining Cost of Goods Sold Under a Periodic  System System Periodic System Separate accounts used to record purchases, freight costs,  returns, and  discounts Company does not maintain a running account of changes in  inventory Ending inventory determined by physical count Chapter 5-48 LO 7  Determine cost of goods sold under a periodic system Determining Cost of Goods Sold Under a Periodic  Determining Cost of Goods Sold Under a Periodic  System System Calculation of Cost of Goods Sold Illustration 5­14 $316,000 Chapter 5-49 LO 7  Determine cost of goods sold under a periodic system Recording Purchases of Merchandise under a Periodic System Recording Purchases of Merchandise under a Periodic System *E5­17  Information related to Chevalier Co. is presented below.  Prepare  *E5­17 the journal entry to record the transaction under a periodic inventory system On April 5, purchased merchandise from Paris Company for $22,000  terms 2/10, net/30, FOB shipping point April 5 Chapter 5-50 LO 8       Purchases Accounts payable   22,000 22,000 Explain the recording of purchases and sales of inventory under a                                 periodic inventory system Recording Purchases of Merchandise under a Periodic System Recording Purchases of Merchandise under a Periodic System *E5­17 Continued  Prepare the journal entry to record the transaction  *E5­17 Continued under a periodic inventory system 2.  On April 6, paid freight costs of $600 on merchandise purchased from  Paris April 6 Chapter 5-51 LO 8       Freight­in (Transportation­in)    Cash   600 600 Explain the recording of purchases and sales of inventory under a                                 periodic inventory system Recording Purchases of Merchandise under a Periodic System Recording Purchases of Merchandise under a Periodic System *E5­17  *E5­17 Continued  Prepare the journal entry to record the transaction  Continued   under a periodic inventory system 4.  On April 8, returned damaged merchandise to Paris Company and  was granted a $4,000 allowance April 8 Chapter 5-52 LO 8       Accounts payable 4,000 Purchase returns and allowances   4,000 Explain the recording of purchases and sales of inventory under a                                 periodic inventory system Recording Purchases of Merchandise under a Periodic System Recording Purchases of Merchandise under a Periodic System *E5­17  *E5­17 Continued  Prepare the journal entry to record the transaction  Continued   under a periodic inventory system 5.  On April 15, paid the amount due to Paris Company in full.   Remember the return of $4,000 of merchandise (Discount = $18,000 x 2% = $360) April 15 Accounts payable Cash  Purchase Discounts Chapter 5-53 LO 8       18,000      17,640 360 Explain the recording of purchases and sales of inventory under a                                 periodic inventory system Recording Sales of Merchandise under a Periodic System Recording Sales of Merchandise under a Periodic System E5­5  Prepare the journal entry for Wheeler Company to record a sale of  E5­5 merchandise under a periodic system.  On December 3, Wheeler Company sold $500,000 of merchandise to Hashmi  Co., terms 2/10, n/30, FOB shipping point. Cost of merchandise sold was  $350,000 Dec. 3 Accounts receivable                 500,000         Sales                                                   500,000 No entry is recorded for cost of goods sold at the time of the sale under a  periodic system Chapter 5-54 LO 8       Explain the recording of purchases and sales of inventory under a                                 periodic inventory system Worksheet for a Merchandising Company Chapter 5-55 Illustration 5B­1                         LO 9  Prepare a worksheet for a merchandising company Copyright Copyright “Copyright © 2008 John Wiley & Sons, Inc. All rights reserved. Reproduction or  translation of this work beyond that permitted in Section 117 of the 1976 United  States Copyright Act without the express written permission of the copyright owner  is unlawful. Request for further information should be addressed to the Permissions  Department, John Wiley & Sons, Inc. The purchaser may make back­up copies for  his/her own use only and not for distribution or resale. The Publisher assumes no  responsibility for errors, omissions, or damages, caused by the use of these programs  or from the use of the information contained herein.” Chapter 5-56 ... Determine cost of goods sold under a periodic system Chapter 5-3 Accounting? ?for? ?Merchandising? ?Operations Accounting? ?for? ?Merchandising? ?Operations Merchandising Merchandising Operations Operations Operating cycles Inventory.. .CHAPTER? ? ACCOUNTING FOR MERCHANDISING OPERATIONS Accounting? ?Principles,   Eighth Edition Chapter 5-2 Study Objectives Study Objectives Identify the differences between service and? ?merchandising? ?companies... The primary source of revenues is referred to as                    sales revenue or  sales Chapter 5-5 LO 1  Identify the differences between service and? ?merchandising? ?companies Merchandising? ?Operations Merchandising? ?Operations Income Measurement Sales

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Mục lục

  • PowerPoint Presentation

  • CHAPTER 5

  • Study Objectives

  • Slide 4

  • Merchandising Operations

  • Slide 6

  • Operating Cycles

  • Inventory Systems

  • Slide 9

  • Recording Purchases of Merchandise

  • Slide 11

  • Slide 12

  • Slide 13

  • Slide 14

  • Slide 15

  • Slide 16

  • Slide 17

  • Slide 18

  • Slide 19

  • Slide 20

  • Slide 21

  • Slide 22

  • Slide 23

  • Recording Sales of Merchandise

  • Slide 25

  • Slide 26

  • Slide 27

  • Slide 28

  • Slide 29

  • Slide 30

  • Slide 31

  • Slide 32

  • Slide 33

  • Slide 34

  • Slide 35

  • Completing the Accounting Cycle

  • Slide 37

  • Slide 38

  • Slide 39

  • Forms of Financial Statements

  • Slide 41

  • Slide 42

  • Slide 43

  • Slide 44

  • Slide 45

  • Slide 46

  • Calculation of Gross Profit

  • Determining Cost of Goods Sold Under a Periodic System

  • Slide 49

  • Recording Purchases of Merchandise under a Periodic System

  • Slide 51

  • Recording Purchases of Merchandise under a Periodic System

  • Slide 53

  • Recording Sales of Merchandise under a Periodic System

  • Worksheet for a Merchandising Company

  • Copyright

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