Chapter

5Accounting

for

MerchandisingOperationObjectivesDescribe

and

illustrate

merchandisingoperations

and

the

two

types

of

inventorysystemsAccount

for

the

purchase

of

inventoryusing

a

perpetual

systemAccount

for

the

sale

of

inventory

using

aperpetual

systemAdjust

and

close

the

accounts

of

amerchandising

businessPrepare

a

merchandiser’s

financialstatementsUse

gross

profit

percentage,

inventoryturnover,

and

days

in

inventory

to

evaluatea

businessObjectivesDescribe

and

illustrate

merchandisingoperations

and

the

two

types

of

inventorysystems41MERCHANDISING

COMPANY

商業(yè)企業(yè)A

merchandising

company

is

an

enterprisethat

buys

and

sells

goods

to

earn

a

profitWholesalers

sell

to

retailersRetailers

sell

to

consumersA

merchandiser’s

primary

sourceofrevenue

is

Sale

Revenue

銷售收入MERCHANDISERExpenses

for

a

merchandiser

are

dividedinto

two

groups:Cost

of

goods

sold(銷售商品成本):thetotal

cost

of

merchandise

sold

during

theperiodOperating

expenses(經(jīng)營費用):expensesincurred

in

the

process

of

earning

salesrevenue.7*

Smart

Touch,

in

textbook

Chapters

1-4,is

a

service

company.**

Greg’s

Tunes,

in

your

textbook,

is

anexample

of

a

merchandising

company.8Operating

cycle

for

merchandiserCashAccountsReceivableMerchandiseInventoryReceiveCashBuyInventorySellInventoryOperating

cycle

for

service

firmAccountsReceivableCashReceiveCashPerformServicesExampleApril

1:

purchase

100

bottles

of

water

@

$1.5April

2:

purchase

200

bottles

of

water

@

$

1.6April

5:

selling

150

bottles

at

$

2April

8:

purchase

200

bottles

of

water

@

$

1.4April

12

selling

300

bottles

at

$2How

to

calculate

cost

of

goods

sold

?Inventory

systemPERIODIC

System

盤存制Goods

counted

periodically

to

determinequantityUsed

by

small

businessesLess

popular

due

to

computerizedinventory

systemsPERPETUAL

System

永續(xù)制Record

ofUnits

purchased

and

cost

amountUnits

sold

and

sales

and

cost

amountsThe

quantity

of

inventory

on

hand

and

its

costBetter

control

of

inventoryPopular

due

to

bar

codesPhysical

count

once

a

yearInventory

system14Used

to:Record

Sales

and

Cost

of

goods

soldUpdates

InventorycountUpdates

purchasing

and

generates

purchase

ordersAccount

for

the

purchase

of

inventory

using

aperpetual

system152RECORDING

PURCHASES

OFMERCHANDISE

UNDER

PERPETUALThe

inventory

account

is

increased

with

eachpurchaseThe

vendor

submits

an

invoice（發(fā)票）

forpaymentThe

invoice

contains:The

sellerThe

purchaserThe

date

of

purchase

(or

shipment)Credit

termsTotal

amount

dueThe

due

dateJournal

entry

for

purchasingThe

Inventory

account,

an

asset–usedonly

for

goods

purchasedDebit

for

gross

amount

of

purchaseThe

method

of

payment

is

creditedAccounts

payable,

if

on

accountCash,

if

purchased

with

cashGENERAL

JOURNALDATEDESCRIPTIONREFDEBITCREDITJune3Inventory700Cash700Paid

for

inventory.GENERAL

JOURNALDATEDESCRIPTIONREFDEBITCREDITJune3Inventory700Accounts

Payable700Inventory

on

account.Purchase

Return

and

AllowancePurchase

returnMerchandise

returned

by

the

purchaserPurchase

allowanceSeller

reduces

amount

owedIncentive

for

purchaser

to

keep

goodsJournal

Entry

for

Purchase

Return

andAllowanceDebit

Accounts

payable

for

amountreturnedCredit

Inventory

for

the

amount

returnedReverses

original

purchase

entryEntry

the

same

for

a

purchaseallowance

.Company

keeps

the

inventoryGENERAL

JOURNALDATEDESCRIPTIONREFDEBITCREDITJune3Inventory700Accounts

Payable700Inventory

on

account.GENERAL

JOURNALDATEDESCRIPTIONREFDEBITCREDITJune4Accounts

Payable100Inventory100Inventory

return.PURCHASE

DISCOUNTSCredit

terms信用條件maypermitthebuyerto claim

acash

discount現(xiàn)金折扣for

the

prompt paymentof

abalancedueThe

buyer

calls

this

discount

a

purchasediscountA

purchase

discount

is

based

on

the

invoicecost less

returns

and

allowances,

if

any.PURCHASE

DISCOUNTS2/10

,

n/302%

discount

if

paid

within

10daysFull

amount

due

within

30daysPURCHASE

DISCOUNTSn/30No

discount,

full

amount

due

in30

dayseomFull

amount

due

bythe

end

of

monthPayment

within

discount

periodDebit

Accounts

payable

for

invoice

amountCredit

Cash

for

the

actual

payment

amount

(Gross

amount

–

discount

amount)Credit

Inventory

for

the

discount

amountGENERAL

JOURNALDATEDESCRIPTIONREFDEBITCREDITJune14Accounts

Payable600Inventory

(600*3%)18Cash582Paid

for

inventory.If

payment

is

sent

after

the

discount

periodCredit

cash

for

the

full

invoice

amountDo

not

reduce

the

inventory

accountPayment

after

discount

periodGENERAL

JOURNALDATEDESCRIPTIONREFDEBITCREDITJune15Accounts

Payable600Cash600Paid

for

inventory.The

sales

agreement

should

indicatewhether

the

seller

or

the

buyer

is

to

paythe

cost

of

transporting

the

goods

tothebuyer’s

place

ofbusinessTransportation

costsTransportation

costsFOB

Shipping

PointBuyer

owns

inventory

when

shippedPurchaser

normally

pays

freight

chargesFreight

inIncreases

cost

of

inventoryGENERAL

JOURNALDATEDESCRIPTIONREFDEBITCREDITJune3Inventory60Cash60Paid

freight

bill.SellerBuyerTitletransfersto

buyerBuyer

paysfreightchargesIncreases

cost

ofinventoryGoods32FOB

DestinationBuyer

owns

inventory

when

goods

arriveSeller

normally

pays

freightFreight

outSelling

expense

to

the

sellerTransportation

costsGENERAL

JOURNALDATEDESCRIPTIONREFDEBITCREDITJune3Delivery

Expense60Cash60Paid

freight

bill.SellerBuyerTitletransfersto

buyerSeller

pays

freightchargesIncreases

expensesGoods35Account

for

the

sale

of

inventoryusing

a

perpetual

system363RECORDING

SALES

OF

MERCHANDISERevenues

are

reported

when

earned

inaccordance

with

the

revenue

recognitionprinciple,

and

in

a

merchandising

company,revenues

are

earned

when

the

goods

aretransferred

from

seller

to

buyer.All

sales

should

be

supported by

adocument

such

as

a

cash

register

tape

orsales invoice

銷售發(fā)票RECORDING

SALES

OF

MERCHANDISESales

of

InventorySales

revenueAmount

earned

from

selling

inventoryRevenue

accountCost

of

goods

sold

(COGS)Cost

of

inventory

sold

to

customersExpense

accountAccounting

for

sales

of

inventoryTwo

journal

entries:Record

the

saleCash

saleCredit

saleUpdate

the

inventoryGENERAL

JOURNALDATEDESCRIPTIONREFDEBITCREDITJune11Accounts

Receivable7,000Sales

Revenue7,000sales

on

account.GENERAL

JOURNALDATEDESCRIPTIONREFDEBITCREDITJune11Cost

of

goods

sold4,200Inventory4,200Record

COGSSales

returns

and

allowancesSales

returns

and

allowancesWhen

customer

returns

goods

or

refusesservicesContra

revenue

account

(debit

balance)Sales

allowanceSeller

grants

a

reduction

in

price

tocustomerMerchandise

is

defective,

damaged,

orotherwise

unsuitableEntry

for

Sales

returns

and

allowancesProcess

the

return

(opposite

of

sale)Sales

returns

and

allowances

(debit,

reducingsales)Refund

Cash

or

reduce

Accounts

receivable(credit)Increase

inventory

(debit,

if

returned

andsellable)Reduce

Cost

of

goods

sold

(credit)GENERAL

JOURNALDATEDESCRIPTIONREFDEBITCREDITJune12Sales

Return500Accounts

Receivable500Received

return

goodsGENERAL

JOURNALDATEDESCRIPTIONREFDEBITCREDITJune12Inventory300Cost

of

goods

sold300Place

back

goodsSales

discountSales

discountsCustomer

pays

within

the

discount periodSeller

has

credittermsReduce

Sales(Contra

revenue

account)Sales

discount

debitedGENERAL

JOURNALDATEDESCRIPTIONREFDEBITCREDITJune17Cash6370Sales

Discount(6500*2%)130Accounts

Receivable6500Cash

collectionSalesminusSales

Returns

&AllowancesminusSales

DiscountsequalsNetSales47NetSalesCost

of

GoodsSoldminusequalsGross

Profit

毛利48Adjust

and

close

the

accountsof

a

merchandising

business494Adjusting

InventoryPhysical

count

of

inventory

at

least

onceper

yearAccount

may

differ

from

the

books

due

to:Theft

or

damage

–

Inventory

shrinkageErrorsGENERAL

JOURNALDATEDESCRIPTIONREFDEBITCREDITJune31Cost

of

goods

sold300Inventory

(40500-40200)300Adjustment

for

shrinkageClosing

entriesClose

revenues

and

contra

revenuesClose

expensesClose e

summaryClose

DrawingPrepare

a

merchandiser’s

financialstatements55556Operating

ExpensesSelling

Expenses

銷售費用Marketing

and

selling

productsIncludes:AdvertisingSales’

salariesStore

rent,

depreciation, taxes,

utilities

and

insuranceFreight

out

or

delivery expensesGeneral

Expenses

管理費用NOT

marketing

productsIncludes:Executive

and

staff

salaryAdministrative

office

building

rent, depreciation,

taxes,

utilities

and insuranceNot

store

relatedOperating

ExpensesMulti-step eStatementLists

several

important

subtotalsGross

profitOperating

eMore

popularSingle-step e

StatementSingle-stepGroups

all

revenues

and

all

expenses togetherNosubtotalsWorks

well

for

service

companiesUse

gross

profit