1 / 11

11.1 Accounting for a Merchandising Business

11.1 Accounting for a Merchandising Business. What is a Merchandising Business?. A business that buys goods and sells for a profit. Examples in Preston?. There are different categories of merchandising business:. Wholesaler:

zoe
Télécharger la présentation

11.1 Accounting for a Merchandising Business

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. 11.1 Accounting for a Merchandising Business

  2. What is a Merchandising Business? • A business that buys goods and sells for a profit Examples in Preston?

  3. There are different categories of merchandising business: • Wholesaler: Buy goods from manufacturer and resells to retailers or consumers. Example: Costco • Retailer: Buys from wholesaler and resells to consumers example: The Gap

  4. What is Merchandise Inventory? • The quantity of merchandise on hand • Current Assets • Debit Balance

  5. Balance sheet: current asset (Merchandise inventory) $25,000 not sold & on hand EXAMPLE: Physical count of inventory  accuracy  lost, theft, damaged, returns $120,000 available goods to sell Income Statement  cost of goods sold (COGS) $95,000 sold during fiscal period

  6. 2 Types of Inventory • Periodic- When inventory is updated at regular intervals (eg. Daily, monthly, annually) • Perpetual- When inventory is updated after each sale Many Businesses use combination of both

  7. 11.2 Four Accounts affecting a Merchandising Business: • Merchandise Inventory: • Current Assets represent beginning inventory for current period (what’s left over from last period) • Adjusted at year-end to equal updated physical count • “DR” balance  valued at cost price

  8. 2. Purchases • Used to record merchandise purchased for resale • O.E. account; considered an expense  Cost to Company (DR) • Part of COGS section Eg. Purchases XXX HST Recoverable XXX Bank or A/P XXX

  9. Sales: • Revenue account for merchandising business • To record sale to customer Bank or A/R XXX Revenue (sales) XXX HST Payable XXX

  10. Freight-in • Transportation charges on incoming goods for resale (expense  cost  DR) • FOB: FREE ON BOARD destination (seller pays transportation charges) destination or FOB shipping (buyer pays transportation charges) • Eg. Freight-in XXX Bank or A/P XXX

  11. Cost of Goods Sold Beginning Inventory, Jan. 1 +Purchases + Freight-in Cost of goods Available for Sale - less inventory, December 31 Cost of Goods Sold

More Related