Презентация на тему: Merchandising Operations Horngren’s Accounting Lecture Eleven Lisa, Li 1

Merchandising Operations Horngren’s Accounting Lecture Eleven Lisa, Li 1
Summary of the Accounting Cycle
Merchandising Operations Horngren’s Accounting Lecture Eleven Lisa, Li 1
Learning Objectives – Chapter 5
Learning Objectives – Chapter 5
Learning Objectives 1
Merchandising Operations- Objective 1
What Are Merchandising Operations?
Operating Cycle of Merchandising Business
Unique Financial Statements of Merchandiser
Merchandiser Financial Statements
Unique Financial Statements of Merchandiser
Main types of Merchandise Inventory systems
Merchandising Operations Horngren’s Accounting Lecture Eleven Lisa, Li 1
Merchandising Operations Horngren’s Accounting Lecture Eleven Lisa, Li 1
Merchandising Operations Horngren’s Accounting Lecture Eleven Lisa, Li 1
Practice Questions p341
Practice Questions p341
Merchandising Operations Horngren’s Accounting Lecture Eleven Lisa, Li 1
Smart Touch Learning Example
Merchandising Operations Horngren’s Accounting Lecture Eleven Lisa, Li 1
1. Purchase Inventory by cash
1. Purchase inventory on Account
2. Purchase Discounts
2. Purchase Discounts
2. Purchase Discounts
3. Purchase Returns and Allowances
3. Purchase Returns and Allowances
4. Transportation Costs
4. Transportation Costs
4. Transportation Costs
Freight In
Merchandise Inventory Account
Freight In Within Discount Period
Freight In Within Discount Period
Cost of Inventory Purchased
Practice Questions p341
Practice Questions - Solution
Merchandising Operations Horngren’s Accounting Lecture Eleven Lisa, Li 1
1. Sale of Merchandise Inventory
1. Recording a Cash Sale
1. Recording a Credit Sale
2. Sales Returns and Allowances
2. Sales Returns Example
2. Sales Allowances Example
3. Sales Discounts after Sales Return
4. Transportation Cost - Freight Out
Homework p306
Homework p342
Merchandising Operations Horngren’s Accounting Lecture Eleven Lisa, Li 1
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Первый слайд презентации

Merchandising Operations Horngren’s Accounting Lecture Eleven Lisa, Li 1

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Слайд 2: Summary of the Accounting Cycle

5- 2 Analyze & j ournalize transactions  Post journal entries to ledger accounts  Prepare unadjusted trial balance Journalize and post adjusting entries Prepare adjusted trial balance Prepare financial statements  Prepare post-closing trial balance Journalize and post closing entries Start with beginning account balances  Prepare the worksheet (optional) accounting

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Слайд 3

5- 3 accounting

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Слайд 4: Learning Objectives – Chapter 5

Describe merchandising operations and the two types of merchandise inventory systems Account for the purchase of merchandise inventory using a perpetual inventory system Account for the sale of merchandise inventory using a perpetual inventory system Accounting 4

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Слайд 5: Learning Objectives – Chapter 5

Adjust and close the accounts of a merchandising business Prepare a merchandiser’s financial statements Use the gross profit percentage to evaluate business performance Accounting 5

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Слайд 6: Learning Objectives 1

Describe merchandising operations and the two types of merchandise inventory systems Accounting 6

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Слайд 7: Merchandising Operations- Objective 1

Accounting 7

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Слайд 8: What Are Merchandising Operations?

Merchandiser: Seller of goods, not producer (not manufacturer) Can be wholesaler or retailer Inventory is a n important current asset Managing A/R is critical to success Accounting 8

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Слайд 9: Operating Cycle of Merchandising Business

1. It begins when the company purchases inventory from an individual or business, called a vendor(manufacturer). 2. The company then sells the merchandise inventory * to a customer. 3. Finally, the company collects cash from customers. * represents the value of inventory that the business has on hand to sell to customers. accounting

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Слайд 10: Unique Financial Statements of Merchandiser

accounting Because the operating cycle of a merchandiser is different than that of a service company, the financial statements differ. Can you find any differences between the two? ( ) ( ) ( ) ( )

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Слайд 11: Merchandiser Financial Statements

Cost of Goods Sold (COGS) The cost of the Merchandise inventory that the business has sold to customers (cost of sales) Largest E in Merchandiser Gross Profit Calculated as: Net Sales—COGS accounting

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Слайд 12: Unique Financial Statements of Merchandiser

accounting Can you find any differences? Merchandise Inventory (CA) is usually the only type of inventory. Merchandise Inventory is usually purchased on credit, so Accounts Payable (CL) may also be higher than a Service Company.

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Слайд 13: Main types of Merchandise Inventory systems

Perpetual Inventory System An inventory system that keeps a running computerized record of merchandise inventory. the data of inventories are perpetually (constantly) updated. Cost but achieves better control over the inventory. Still must do the physical count (for misplaced, stolen, or damaged inventory) Periodic Inventory System This system requires businesses to obtain a physical count of inventory to determine the quantities on hand. small, local store without optical-scanning local Restaurants and small retail stores accounting

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Periodic Inventory is physically counted Inexpensive inventory Small shops without opscan capability As computer technology takes over more and more accounting, the Periodic Method is used less and less. accounting Periodic Inventory System

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Слайд 15

Perpetual Inventory is constantly updated. Modern Perpetual Inventory System records: Units purchased and cost amounts. Units sold and sales and cost amounts. The quantity of merchandise inventory on hand and its cost. Every inflow and outflow is tracked in real time Merchandising and purchase systems are integrated with the accounting system accounting Perpetual Inventory System

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Слайд 16

Accounting 16 Merchandise Inventory systems

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Слайд 17: Practice Questions p341

accounting

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Слайд 18: Practice Questions p341

accounting a. Periodic b. Perpetual c. Perpetual d. Periodic e. Perpetual

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Слайд 19

accounting Learning Objectives 2 Purchase of merchandise inventory using perpetual inventory system

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Слайд 20: Smart Touch Learning Example

Smart Touch Learning has now decided to discontinue its service business and instead plans to sell touch screen tablet computers that are preloaded with its e-learning software programs. Smart Touch Learning will purchase these tablets from a vendor. the cycle of a merchandising entity begins with the purchase of merchandise inventory. The vendor (Southwest Electronics Direct) ships the tablet computers to Smart Touch Learning and sends an invoice the same day. After the merchandise inventory is received, Smart Touch Learning pays the vendor. Accounting 20

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Слайд 21

accounting

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Слайд 22: 1. Purchase Inventory by cash

Assume Smart Touch Learning receives the goods on June 3, 2015 and makes payment on that date accounting

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Слайд 23: 1. Purchase inventory on Account

If we had received the inventory on J une 3, but chosen to pay later... accounting

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Слайд 24: 2. Purchase Discounts

Many businesses offer purchases a discount for early payment. Invoices that accompany credit purchases often indicate “credit terms,” which offer the buyer discount if they pay early. accounting

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Слайд 25: 2. Purchase Discounts

The discount amount is determined by the “credit terms” indicated on the invoice. 3/15, NET 30 DAYS Discount Period Discount Percent Total Credit Period accounting Discount %: purchasers as an incentive for early payment; the seller is in need of positive cash inflow Discount period: the company can deduct 3% from the total bill if it pays within 15 days. NET 30 days: is due in 30 days. Pay the full amount of the bill. EOM: means payment is due at the end of the current month.

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Слайд 26: 2. Purchase Discounts

If Smart Touch Learning pays within the 15 day period, they get a 3% discount of the total bill (excluding freight charges). accounting What if Smart Touch Learning pays this invoice on June 24,2015 ?

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Слайд 27: 3. Purchase Returns and Allowances

P urchase Return : A situation in which sellers allow purchasers to return merchandise that is defective, damaged, or otherwise unsuitable. Purchase Allowance : An amount granted to the purchaser as an incentive to keep goods that are not “as ordered.” When all or a portion of a purchase is returned to the seller, it is recorded as a reduction of the merchandise inventory account. accounting

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Слайд 28: 3. Purchase Returns and Allowances

Assume that Smart Touch Learning has not yet paid the original bill of June 1. Suppose 20 of the tablets were damaged in shipment. On June 4, Smart Touch Learning returns the goods valued at $7,000($350×20) to the vendor and records the purchase return as follows: accounting

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Слайд 29: 4. Transportation Costs

When goods are in transit from the seller to the buyer, an issue arises as to who bears the risk of loss in the event that the inventory becomes lost or damaged while in the custody of the third-party shipper. The purchase agreement specifies FOB (free on board) terms to determine when title to the goods transfers to the purchaser and who pays the freight. accounting

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Слайд 30: 4. Transportation Costs

The purchase agreement specifies that either the seller or the buyer must pay the transportation cost and assign the risk of loss. FOB shipping point : the buyer takes ownership (title) to the goods after the goods leave the seller’s place of business (shipping point). In most cases, the buyer (owner of the goods) also pays the freight. FOB destination : the buyer takes ownership (title) to the goods at the delivery destination point. In most cases, the seller (owner of the goods while in transit) usually pays the freight. accounting

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Слайд 31: 4. Transportation Costs

While goods are in transit, rules are necessary to determine who bears the risk of loss. Freight costs are either freight in or freight out. accounting

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Слайд 32: Freight In

Freight in is the transportation cost to ship goods into the purchaser’s warehouse; thus, it is freight on purchased goods. Under FOB shipping point, the buyer owns the goods while they are in transit, so the buyer pays the freight. Because the freight is a cost that must be paid to acquire the inventory, Freight In becomes part of the cost of merchandise inventory. Assume ST Learning pays a $60 freight charge on the June 3 purchase. accounting

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Слайд 33: Merchandise Inventory Account

The merchandise inventory account will reflect the net results of all the transactions for the period. Purchase Purchase allowance Purchase Discount Transportation cost (freight in) 5- 33 accounting

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Слайд 34: Freight In Within Discount Period

Under FOB shipping point, the seller sometimes prepays the transportation cost as a convenience and lists this cost on the invoice. Discounts are not computed on the transportation costs because there is no discount on freight. Only the cost of transporting inventory into the buyer’s place of business is considered part of the cost of the inventory. accounting

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Слайд 35: Freight In Within Discount Period

Assume, for example, ST Learning makes a $5,000 purchase of goods and related freight charge of $400, on June 20 on account with terms of 3/5, n/30. The seller prepays the freight charge. If ST Learning pays within the discount period, the discount will be computed only on the $5,000 merchandise cost, not on the total invoice of $5,400. accounting

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Слайд 36: Cost of Inventory Purchased

Net Cost of Inventory Purchased = Purchase cost of inventory − Purchase returns and allowances − Purchase discounts + Freight in Accounting 36 Suppose that during the year, Smart Touch Learning buys $281,750 of inventory, returns $61,250 of the goods, and takes a $4,410 early payment discount. The company also pays $14,700 of freight in. Calculate net cost of the inventory purchased.

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Слайд 37: Practice Questions p341

accounting 37

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Слайд 38: Practice Questions - Solution

accounting 38 The inventory cost for Dady is $14,882 = ($20,250 + $90 – $5,000 – $458) Date Accounts and Explanation Debit Credit Mar. 2 Merchandise Inventory 20,250 Accounts Payable 20,250 Purchased inventory on account Mar. 3 Merchandise Inventory 90 Cash 90 Paid a freight bill Mar. 8 Accounts Payable 5,000 Merchandise Inventory 5,000 Returned inventory to vender Mar. 14 Accounts Payable ($20,250 − $5,000) 15,250 Cash ($15,250 – $458) 14,792 Merchandise Inventory ($15,250 × 0.03) 458 Paid within disount period net of return

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Слайд 39

accounting Learning Objectives 3 Account for the sale of merchandise inventory using a perpetual inventory system

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Слайд 40: 1. Sale of Merchandise Inventory

In a perpetual system, two entries must be made for every sale accounting Record the sale Cash (or AR) Dr Sales(Sales R) Cr 2. Record the reduction of inventory Cost of Goods Sold (COGS) Dr Merchandise Inventory Cr

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Слайд 41: 1. Recording a Cash Sale

Smart Touch Learning sold 2 tablets for $1,000 cash. The cost of those tablets was $700. accounting Matching principle : all expenses are recorded when they are incurred during the period. Expenses are matched against the revenues of the period.

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Слайд 42: 1. Recording a Credit Sale

Smart Touch Learning sold 10 tablets for $500 each on account. Sales terms are 2/10, n/30. The cost of those tablets was $3,500. accounting

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Слайд 43: 2. Sales Returns and Allowances

Sometimes, companies may have customers that return goods, asking for a refund or deducted the total amount. Sales Returns and Allowances: The return of goods or granting of an allowance. Such an allowance reduces the future cash collected from the customer. It is a contra account to ‘Sales’, and has a normal debit balance. 5- 43 accounting

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Слайд 44: 2. Sales Returns Example

Assume that the customer has not yet paid the original bill of June 21. Suppose, on June 25, the customer returns 3 tablets that sold for $1,500 and originally cost $1,050. If ST learning accept a return, in a perpetual system, we also need to make two entries. accounting Record return of the inventory Record sales returns

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Слайд 45: 2. Sales Allowances Example

When a seller grants a sales allowance, there are no returned goods from the customer. Therefore, there is no second entry to adjust the Merchandise Inventory account. Suppose that on June 28 Smart Touch Learning grants a $100 sales allowance for goods damaged in transit. accounting

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Слайд 46: 3. Sales Discounts after Sales Return

Many sellers offer customers a discount for early payment. Sales discounts is a contra account to Sales. If sales returns and allowances occur before the discount period has expired, any discount would be calculated net of the returns and allowances. The customer pays ST Learning on June 30, 9 days after the invoice date, and after the return and the allowance. 5- 46 accounting

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Слайд 47: 4. Transportation Cost - Freight Out

The freight in is part of the inventory cost for the buyer. The freight out is a delivery expense to the seller. Smart Touch Learning pays $30 to ship the June 21 sale to the customer. 5- 47 accounting

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Слайд 48: Homework p306

accounting 48

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Слайд 49: Homework p342

accounting 49

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