acc. for merch. bus-rev [compatibility mode]
TRANSCRIPT
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Accounting for Accounting for Merchandising BusinessesMerchandising Businesses
Service Business
Fees earned $XXXOperating expenses –XXXNet income $XXX
Nature of BusinessesNature of Businesses
Merchandising Business
Sales $XXXCost of Merchandise Sold –XXXGross Profit $XXXOperating Expenses –XXXNet Income $XXX
Nature of BusinessesNature of Businesses
Multiple-Step Income
Statement
Revenue from sales:Sales $720,185Less:Sales returns and allowances $ 6,140
Sales discounts 5,790 11,930Net sales $708,255
Cost of merchandise sold 525,305Gross profit $182,950
NetSolutionsIncome Statement For the Year Ended
December 31, 2007
ContinuedContinued
Operating expenses:Selling expenses:
Sales salaries expense $56,230Advertising expense 10,860Depr. Expense–store equipment 3,100Miscellaneous selling expense 630
Total selling expenses $ 70,820Administrative expenses:
Office salaries expense $21,020Rent expense 8,100Depr. expense–office equipment 2,490Insurance expense 1,910Office supplies expense 610Misc. administrative expense 760
Total admin. expenses 34,890Total operating expenses 105,710
Income from operations $ 77,240
ContinuedContinued
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Other income and expenses:Rent revenue $ 600Interest expense (2,440 ) (1,840)
Net income $75,400
ConcludedConcluded
MetodeMetode AkuntansiAkuntansi PeriodikPeriodik vs. vs. PerpetualPerpetual
Metode Periodik
• Suatu metode untuk menentukan harga pokok barang yang dijual dan nilai persediaan barang dagangan.
• Dalam metode ini, catatan persediaan tidak menunjukkan nilai barang dagangan yang tersedia untuk dijual dan nilai barang dagangan yang terjual selama periode tersebut.
• Dalam metode ini, setiap pembelian dan penjualan barang dagangan dicatat dalam akun Persediaan dan akun Harga Pokok Penjualan.
• Nilai barang dagangan tersedia untuk dijual dan nilai barang dagangan yang dijual secara kontinu disajikan di catatan persediaan.
MetodeMetode AkuntansiAkuntansi PeriodikPeriodik vs. vs. PerpetualPerpetual
Metode Perpetual
Cost of Merchandise PurchasedCost of Merchandise Purchased
Purchases $521,980
Less: Purchase returns and allowances $9,100
Purchase discounts 2,525 11,625
Net purchases $510,355
Add transportation-in 17,400
Cost of merchandise purchased $527,755
Cost of Merchandise SoldCost of Merchandise SoldMerchandise inventory, 1/1/07 $ 59,700Purchases $521,980Less: Purchase returns and
allowances $9,100Purchase discounts 2,525 11,625
Net purchases $510,355Add transportation-in 17,400
Cost of merchandise purchased 527,755Merchandise available for sale $587,455Less merchandise inventory, 12/31/07 62,150Cost of merchandise sold $525,305
Single-Step Income Statement for a Merchandising
Business
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Revenues:Net sales $708,255Rent revenue 600
Total revenues $708,855Expenses:
Cost of merchandise sold $525,305Selling expenses 70,820Administrative expenses 34,890Interest expense 2,440
Total expenses 633,455Net income $ 75,400
NetSolutionsIncome Statement
For the Year Ended December 31, 2007
Statement of Owner’s Equity for
a Merchandising Business
Chris Clark, capital, 1/1/07 $153,800Net income for year $75,400Less withdrawals 18,000Increase in owner’s equity 57,400Chris Clark, capital, 12/31/07 $211,200
NetSolutionsStatement of Owner’s Equity
For the Year Ended December 31, 2007
Balance Sheet
AssetsCurrent assets:
Cash $52,950Accounts receivable 91,080Merchandise inventory 62,150Office supplies 480Prepaid insurance 2,650
Total current assets $209,310
NetSolutionsBalance Sheet
December 31, 2007
ContinuedContinued
Property, plant, and equipment: Land $20,000Store equipment $27,100
Less accumulateddepreciation 5,700 21,400
Office equipment $15,570Less accumulated
depreciation 4,720 10,850Total property, plant, andequipment 52,250
Total assets $261,560
ContinuedContinued
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LiabilitiesCurrent liabilities:
Accounts payable $22,420Note payable (current portion) 5,000Salaries payable 1,140Unearned rent 1,800
Total current liabilities $ 30,360Long-term liabilities:
Note payable (due 2017) 20,000Total liabilities $ 50,360
Owner’s EquityChris Clark, capital 211,200Total liabilities and owner’s equity $261,560
ConcludedConcluded
Sales TransactionsSales Transactions
JOURNAL
Date DescriptionPost.
Ref. Dr Cr.
1
2
3
4
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Jan. 3 Cash 1 800 002007
Sales 1 800 00
To record cash sales.
On January 3, a firm sold $1,800 On January 3, a firm sold $1,800 of merchandise for cash.of merchandise for cash.
Cash SalesCash Sales Cash SalesCash Sales
Using a perpetual inventory, the inventory Using a perpetual inventory, the inventory cost of $1,200 must be recorded.cost of $1,200 must be recorded.
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3 Cost of Merchandise Sold 1 200 00
Merchandise Inventory 1 200 00
To record the cost ofmerchandise sold.
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Credit card sales (MasterCard or Credit card sales (MasterCard or Visa) are recorded as cash sales.Visa) are recorded as cash sales.At the end of the month, $48 was At the end of the month, $48 was sent to cover this service charge.sent to cover this service charge.
JOURNAL
Date DescriptionPost.
Ref. Dr Cr.
1
2
3
4
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Cash 48 00
Jan. 31 Credit Card Expense 48 002007
Cash SalesCash Sales
To record service chargeson credit card sales for themonth.
Jan. 12 Accounts Receivable—Sims Co. 510 00
Invoice No. 7172.
Sales 510 00
12 Cost of Merchandise Sold 280 00Merchandise Inventory 280 00
Cost of merchandise sold on Invoice No. 7172.
Sales on AccountSales on Account
On January 12, a firm sold Sims Company On January 12, a firm sold Sims Company merchandise on account, $510. The cost of merchandise on account, $510. The cost of
the merchandise to the seller was $280.the merchandise to the seller was $280.
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Sales DiscountsSales Discounts
The terms for when payments for merchandise are to be made are
called credit terms.
If buyer is allowed an amount of time to pay, it is known as the credit period.
If invoice is paid within 10 days of
invoice date
Sales DiscountsSales Discounts
Credit Terms
Invoice for $1,500Terms:
2/10, n/30
$1,470 paid (less 2% as a cash
discount)
If invoice isNOT paid within 10 days of
invoice date
Sales DiscountsSales Discounts
Credit Terms
Invoice for $1,500Terms:
2/10, n/30
$1,500 PAID
Sales DiscountsSales Discounts
On January 21, the firm receives the On January 21, the firm receives the amount due from Sims (refer to Slide amount due from Sims (refer to Slide
25), less the 2 percent discount.25), less the 2 percent discount.
Jan. 21 Cash 499 80
Accounts Receivable—Sims Co. 510 00
Sales Discounts 10 20
Collection of Invoice
No. 7172, less discount.
Sales Returns and AllowancesSales Returns and Allowances
Merchandise that is returned to the vendor is referred to as a sales return.
If there is a defect in the product or the wrong item was shipped, the seller
may reduce the initial price at which the goods were sold. This is known as
a sales allowance.
Jan. 13 Sales Returns and Allowances 225 00
Credit Memo No. 32.
Accounts Receivable—Krier Co. 225 00
13 Merchandise Inventory 140 00Cost of Merchandise Sold 140 00
Cost of merchandise returned—Credit Memo 32.
Sales Returns and AllowancesSales Returns and Allowances
On January 13, issued Credit Memo 32 to On January 13, issued Credit Memo 32 to KrierKrierCompany for merchandise returned to Company for merchandise returned to NetSolutionsNetSolutions. .
Selling price, $225; cost to Selling price, $225; cost to NetSolutionsNetSolutions, $140., $140.
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Purchase Purchase TransactionsTransactions Date Description
Post.
Ref. Dr Cr.
1
2
3
4
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Jan. 3 Merchandise Inventory 2 510 002007
Cash 2 510 00
Purchased inventory from
Bowen Co.
Purchase Transactions
On January 13, Purchased merchandise On January 13, Purchased merchandise for cash from Alden Company, $2,510.for cash from Alden Company, $2,510.
What’s the last day the invoice can be paid?
Purchase DiscountsPurchase Discounts
Alpha Technologies issues an invoice for
$3,000 to NetSolutions dated
March 12, with terms 2/10, n/30.
Invoice period 30Days in March 31Date of invoice 12Remaining days 19April 11
Let’s do a simple calculation.
The full amount is due on April 11.
Purchase DiscountsPurchase Discounts
We can borrow at an annual interest rate of 6%. Should we borrow the to pay the invoice within the discount period?
Purchase DiscountsPurchase Discounts
$60 discount (2% x
$3,000)?
Discount $60.00Interest for 20 days
at the rate of 6%on $2,940 –9.80
Savings from borrowing $50.20
Let’s see… Interest on the amount due of $3,000 less
the 2 percent…
Purchase DiscountsPurchase Discounts
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Looks like we should take advantage of the discount even if we
have to borrow the money.
Purchase DiscountsPurchase Discounts
Discount $60.00Interest for 20 days
at the rate of 6%on $2,940 –9.80
Savings from borrowing $50.20
JOURNAL
Date DescriptionPost.
Ref. Dr Cr.
1
2
3
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On March 12, On March 12, NetSolutionsNetSolutions purchased purchased merchandise on account from Alpha merchandise on account from Alpha
Technologies, $3,000.Technologies, $3,000.
Mar. 12 Merchandise Inventory 3 000 002007
Accounts Payable—Alpha
Technologies 3 000 00
Purchase DiscountsPurchase Discounts
JOURNAL
Date DescriptionPost.
Ref. Dr Cr.
1
2
3
4
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If payment is made by March 22 If payment is made by March 22 NetSolutionsNetSolutionsrecords the discount as a reduction in cost.records the discount as a reduction in cost.
Mar. 22 Accounts Payable—Alpha Technol. 3 000 00
Cash 2 940 00
Merchandise Inventory 60 00
2007
Purchase DiscountsPurchase Discounts
JOURNAL
Date DescriptionPost.
Ref. Dr Cr.
1
2
3
4
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If If NetSolutionsNetSolutions does not pay the invoice until does not pay the invoice until April 11, it would pay the full amount.April 11, it would pay the full amount.
Apr. 11 Accounts Payable—Alpha Technol. 3 000 00
Cash 3 000 00
2007
Purchase DiscountsPurchase Discounts
Purchases Returns and AllowancesPurchases Returns and Allowances
A purchases return involves actually returning merchandise that is damaged or does not meet the
specifications of the order.
When the defective or incorrect merchandise is kept by the buyer and the vendor makes a price adjustment,
this is a purchases allowance.
NetSolutions received the NetSolutions received the delivery from Maxim delivery from Maxim
Systems and determined that Systems and determined that $900 of the items were not $900 of the items were not the merchandise ordered. the merchandise ordered.
DebitDebit memorandummemorandum #18 is #18 is issued to Maxim Systems.issued to Maxim Systems.
Purchases Returns and AllowancesPurchases Returns and Allowances
You sent me the wrong interface cards. We’ll send a debit memorandum with the
returned items.
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Mar. 7 Accounts Payable—Maxim Systems 900 00
Debit Memo No. 18
Merchandise Inventory 900 00
Purchases Returns and AllowancesPurchases Returns and Allowances Purchases Returns and AllowancesPurchases Returns and Allowances
On May 2, NetSolutions purchased $5,000 of merchandise from Delta Data Link,
subject to terms 2/10, n/30.
May 2 Merchandise Inventory 5 000 00
Purchased merchandise.
Accounts Payable—Delta Data 5 000 00
Purchases Returns and AllowancesPurchases Returns and Allowances
On May 4, NetSolutions returns $3,000 of the merchandise.
May 4 Accounts Payable—Delta Data Links 3 000 00
Returned portion of
merchandise purchased.
Merchandise Inventory 3 000 00
Purchases Returns and AllowancesPurchases Returns and Allowances
On May 12, NetSolutions pays the amount due.
May 12 Accounts Payable—Delta Data Links 2 000 00
Paid invoice.
Cash 1 960 00
Merchandise Inventory 40 00
($5,000 ($5,000 ––$3,000) x $3,000) x
2%2%
Transportation Transportation CostsCosts
FOB Shipping PointFOB Shipping Point
Buyer pays freight costs and debits Merchandise Inventory
Fruit Express
Title passes to buyer as shipment leaves shipping point.
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June 10 Merchandise Inventory 900 00
Purchased merchandise, terms
FOB shipping point.
Accounts Payable—Magna Data 900 00
10 Merchandise Inventory 50 00Cash 50 00
Paid shipping cost .
On June 10, On June 10, NetSolutionsNetSolutions buys merchandise from buys merchandise from Magna Data on account, $900, terms FOB shipping Magna Data on account, $900, terms FOB shipping
point and pays the transportation cost of $50.point and pays the transportation cost of $50.
FOB Shipping PointFOB Shipping Point FOB DestinationFOB Destination
Title passes to buyer upon arrival at
destination.
Seller pays freight costs and debits Transportation Out
Fruit Express
On June 15, On June 15, NetSolutionsNetSolutions sells merchandise to sells merchandise to KranzKranzCompany on account, $700, terms FOB destination. Company on account, $700, terms FOB destination.
The cost of the merchandise sold is $480. The cost of the merchandise sold is $480. NetSolutionsNetSolutions pays the transportation cost of $40.pays the transportation cost of $40.
FOB DestinationFOB DestinationJune 15 Accounts Receivable—Kranz Co. 700 00
Sold merchandise, terms FOB
destination.
Sales 700 00
15 Cost of Merchandise Sold 480 00Merchandise Inventory 480 00
Cost of sale of Kranz Co .
FOB DestinationFOB Destination
June 15 Transportation Out 40 00
Cash 40 00
Paid shipping cost on
merchandise sold.
On June 15, On June 15, NetSolutionsNetSolutions sells merchandise to sells merchandise to KranzKranzCompany on account, $700, terms FOB destination. Company on account, $700, terms FOB destination.
The cost of the merchandise sold is $480. The cost of the merchandise sold is $480. NetSolutionsNetSolutions pays the transportation cost of $40.pays the transportation cost of $40.
Sales TaxesSales Taxes
On August 12, merchandise is sold on On August 12, merchandise is sold on account to Lemon Company, $100. The account to Lemon Company, $100. The
state has a 6% sales tax.state has a 6% sales tax.
Aug. 12 Accounts Receivable—Lemon Co. 106 00
Sales 100 00
Sales Taxes Payable 6 00Invoice No. 339
Sales TaxesSales Taxes
On September 15, the seller sends in a On September 15, the seller sends in a payment of $2,900 to the taxing unit for payment of $2,900 to the taxing unit for
the August taxes collected.the August taxes collected.
Sept.15 Sales Tax Payable 2 900 00
Cash 2 900 00Payment for sales taxes
collected during August.
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Balance Sheet Accounts
200 Liabilities210 Accounts Payable211 Salaries Payable212 Unearned Rent215 Notes Payable
300 Owner’s Equity310 Chris Clark, Capital311 Chris Clark, Drawing312 Income Summary
100 Assets110 Cash112 Accounts Receivable115 Merchandise Inventory116 Office Supplies117 Prepaid Insurance120 Land123 Store Equipment124 Accumulated Depreciation—
Store Equipment125 Office Equipment126 Accumulated Depreciation—
Office Equipment
NetSolutionsChart of Accounts
Income Statement Accounts
600 Other Income610 Rent Revenue
700 Other Expense710 Interest Expense
400 Revenues410 Sales411 Sales Returns and
Allowances412 Sales Discounts
500 Costs and Expenses510 Cost of Merchandise Sold520 Sales Salaries Expense521 Advertising Expense522 Depreciation Expense—
Store Equipment523 Transportation Out529 Miscellaneous Selling Expense530 Office Salaries Expense531 Rent Expense532 Depreciation Expense—
Office Equipment533 Insurance Expense534 Office Supplies Expense539 Miscellaneous Admin. Expense
NetSolutionsChart of Accounts
The following selected transactions were completed by Cruise Co., during July of current of the year :
• 2 Juli: Purchased merchandise from Nadezh Co. $9,000, term FOB Shipping point, 2/10, n/eom. Prepaid transportation cost of $200 were added to the invoice.
• 3 Juli :Sold merchandise for $ 11,000, plus 5% sale s tax to cash customers. The cost of merchandise sold was $ 9,500.
• 4 Juli : Sold merchandise on account to Hogwart Co. $ 30,000, term FOB Destination 1/10 , n/30. The cost of merchandise sold was $ 25,500.
• 5 Juli :Sold merchandise to customer who used American Express Card, $20,100. The cost of merchandise sold was $18,000.
• 10 Juli : Issued credit memorandum for $7,500 to Hogwart Co. for merchandise returned from sale on July 4. The cost of merchandise sold was $ $7,000.
• 11 Juli : Sold merchandise for on account to Dumbledore Co. $ 9,600, term FOB shipping point, 2 /10, n/eom. Added $150 to the invoice for transportation cost prepaid. The cost of merchandise sold was $7,000.
• 12 Juli : Received check for amount due from Hogwar t Co. for sale on July 4
• 13 juli : Received check from American Express fo r non bank credit card on July 5,
• 17 Juli :Paid Nadezh Co. for invoice of July 2.• 24 Juli : Received on account from sale of July 1 1 to
Dumbledore Co.• 27Juli : Paid First Bank $900 for service fees for
handling Master Card sales during July
The EndThe End