1 / 21

Chapter 7

Chapter 7. The Merchandising Company. Merchandising . Sell goods (products) Net Income: Revenue – Cost of Goods Sold = Gross Profit Gross Profit – Expenses = Net Income Schedule of Cost of Goods Sold provides details on an income statement. Schedule of Cost of Goods Sold. Inventory.

inigo
Télécharger la présentation

Chapter 7

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. Chapter 7 The Merchandising Company

  2. Merchandising • Sell goods (products) • Net Income: Revenue – Cost of Goods Sold = Gross Profit Gross Profit – Expenses = Net Income • Schedule of Cost of Goods Sold provides details on an income statement

  3. Schedule of Cost of Goods Sold

  4. Inventory • An account that stores the value of goods not yet resold • Periodic System: count merchandise not sold at the end of the period to determine cost of goods sold • Perpetual System: record inventory and cost of goods sold when sales made

  5. “Cost” Accounts • Purchases: debit when buying goods for resale in periodic system • Purchase Returns and Allowances: credit when returning goods not useful • Purchase Discounts: credit when making payment for good early • Transportation on Purchases: debit to receive goods, similar to expense • Cost of Goods Sold is created at period end in periodic and debited in every sale in perpetual

  6. Revenue Accounts • Sales: credited to indicate revenue • Sales Returns and Allowances: debited to show customer not satisfied with goods • Sales Discounts: debited when customer pays early

  7. Terms of Sale • COD: customer pays when goods delivered • Net 30: full amount due in 30 days • EOM: full amount due at end of the month • 2/10, n/30: receive 2% discount if paid within 10 days after invoice received

  8. Invoices • Sales Invoice: dr A/R cr Sales • Credit Invoice: dr Sales Returns cr A/R • Purchase Invoice: dr Purchases or Inventory cr A/P

  9. Journal Entries • Credit Sale dr A/R 300 cr Sales 3001/10, net 30, invoice #45 • Return dr Sales Returns and Allowance 100 cr A/R 100

  10. Journal Entries (periodic) • Payment within discount period dr Cash 297 dr Sales Discounts 3 cr A/R 300 • Payment beyond discount dr Cash 300 cr A/R 300

  11. Journal Entries (periodic) • Purchase goods for resale (periodic) dr Purchases 400 cr Cash or A/P 4002/15, n/30, invoice #P398 • Payment within discount period* dr A/P 400 cr Purchase Discounts 8 cr Cash 392 Cheque #26 for invoice #P398 * Otherwise A/P and Cash

  12. Journal Entries • Transportation (for goods for resale) dr Transportation-In 50 cr A/P or Cash 50 • Delivery Charge (for goods sold to customers) dr Delivery Expense 25 cr A/P or Cash 25

  13. Journal Entries (perpetual) • Purchase good for resale: • Sale: dr Inventory 300 cr A/P or Cash 300 dr A/R or Cash 400 cr Sales 400 and dr Cost of Goods Sold 300 cr Inventory 300

  14. Journal Entries (perpetual) • Inventory shortage (count at end of period) dr Inventory Shortage 20 cr Inventory 20Charge shortage to expense

  15. Sales Taxes • GST: Goods and Services Tax 7% • PST: Provincial Sales Tax 8% • Typical Sale: dr Cash or A/R 115 cr Sales 100 cr GST Payable 7 cr PST Payable 8

  16. Sales Taxes • GST on Purchases: dr Purchases (or Inventory, etc.) 200 dr GST Refundable 16 cr Cash or A/P 216 • “Remit” GST if owing: • Refund of GST is owed: dr GST Payable 500 cr GST Refundable 450 cr Cash 50 dr GST Payable 450 dr Cash 50 cr GST Refundable 500

  17. Credit Cards • Increases sales • Typical Sale: dr Cash 672dr Visa Discount Expense 18 cr Sales 600 cr PST Payable 48 cr GST Payable 42$600 x 3% visa charge

  18. Debit Cards • Charged by banks and as good as cash to retailer dr Cash 114.75dr Debit Card Expense 0.25 cr Sales 100 cr PST Payable 8 cr GST Payable 7

  19. NEW Original Close all Close all Worksheet (perpetual)

  20. Complete Income Statement

  21. Chart of Accounts • Assets 100s (e.g. Inventory 130) • Liabilities 200s • Equities 300s • Revenues 400s (e.g. Sales 400, Sales Returns 401) • Cost Accounts 500s (e.g. Cost of Goods Sold 500, Purchases 500, Purchase Returns 501, etc.) • Expenses 600s

More Related