century 21 accounting © 2009 south-western, cengage learning lesson 4-1 responsibility accounting...
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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 4-1LESSON 4-1
Responsibility Accounting for a Merchandising Business
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 4-1
TERMS REVIEWTERMS REVIEW fiscal period – length of time in which a business reports
financial information responsibility accounting – assigning control of business
revenues, costs, and expenses as a responsibility of a specific manager
direct expense – expenses that are identifiable with and chargeable to a specific department
indirect expense – expenses that are a part of overall business operation and not part of one specific department
departmental margin = revenue - cost of mdse sold - direct expenses
departmental margin statement - Reports departmental margin for a specific department
page 91
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LESSON 4-1
RECORDING A DIRECT EXPENSERECORDING A DIRECT EXPENSE page 90
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 4-1
RECORDING AN INDIRECT EXPENSERECORDING AN INDIRECT EXPENSE page 90
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 4-2LESSON 4-2
Interim Departmental Statement of Gross Profit
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 4-2
TERMS REVIEWTERMS REVIEW
gross profit – Revenue from sales minus the cost of merchandise sold
departmental statement of gross profit – statement showing gross profit for each department
periodic inventory – physically counting, measuring, weighing, etc. merchandise on hand (weekly, monthly or yearly)
perpetual inventory – continuous record of increases, decreases and balances on hand (usually done by point of sale scanners)
gross profit method of estimating an inventory – estimating inventory by using the previous year’s percentage of gross profit on operations
component percentage – percentage relationship between one financial statement item and the total that includes that item
page 97
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LESSON 4-2
1. List beginning inventory.
2. Determine net purchases.
3. Calculate merchandise for sale.
4. Determine net sales.
5. Calculate estimated gross profit.
6. Calculate the estimated cost of merchandise sold.
7. Calculate estimated ending inventory.
ESTIMATING ENDING ESTIMATING ENDING MERCHANDISE INVENTORYMERCHANDISE INVENTORY page 94
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77
6655
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LESSON 4-2
INTERIM DEPARTMENTAL INTERIM DEPARTMENTAL STATEMENT OF GROSS PROFITSTATEMENT OF GROSS PROFIT page 95
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 4-2
1. The cost of merchandise sold percentage:
2. The gross profit margin percentage:
.6076 or 60.8%=$42,186.47
$69,429.95
.3924 or 39.2%=$27,243.48
$69,429.95
COST OF MERCHANDISE SOLD AND COST OF MERCHANDISE SOLD AND GROSS PROFIT PERCENTAGESGROSS PROFIT PERCENTAGES page 96
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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 4-3LESSON 4-3
Preparing a Work Sheet for a Departmentalized Business
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LESSON 4-3
TERMS REVIEWTERMS REVIEW
schedule of accounts receivable schedule of accounts payable work sheet trial balance plant assets depreciation expense
page 110
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 4-3
PROVING THE ACCURACY OF PROVING THE ACCURACY OF POSTING TO SUBSIDIARY LEDGERSPOSTING TO SUBSIDIARY LEDGERS page 99
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 4-3
pages 102-103DEPARTMENTAL WORK SHEETDEPARTMENTAL WORK SHEET
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 4-3
DEPARTMENTAL WORK SHEETDEPARTMENTAL WORK SHEET pages 102-103
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 4-3
ADJUSTMENT INFORMATIONADJUSTMENT INFORMATION page 104
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 4-3
ADJUSTMENTS SHOWN ON ADJUSTMENTS SHOWN ON WORK SHEETWORK SHEET
PercentageTotal Saleson Account
Estimated Uncollectible Accounts Expense
× =
$210,940.00 × = $2,109.401%
page 104
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 4-3
2. Write department loss in Income Statement Debit column.
1. Write department loss in Departmental Margin Statement Credit column.
DEPARTMENTAL AND COMPANY DEPARTMENTAL AND COMPANY LOSS ON A WORK SHEETLOSS ON A WORK SHEET
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page 109
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3. Record company loss in Income Statement Credit column.
4. Record company loss in Balance Sheet Debit column.
5. Add description.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 4-4LESSON 4-4
Responsibility Statements for a Merchandising Business
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 4-4
TERMS REVIEWTERMS REVIEW
responsibility statements income statement statement of stockholders’ equity capital stock retained earnings dividends balance sheet
page 117
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LESSON 4-4
1. Determine net sales for department.
2. Determine cost of merchandise sold for department.
3. Calculate gross profit.
4. Record direct expenses of the department.
5. Calculate the departmental margin.
DEPARTMENTAL MARGIN DEPARTMENTAL MARGIN STATEMENTSTATEMENT—AUDIO—AUDIO page 111
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LESSON 4-4
COMPONENT PERCENTAGES ON COMPONENT PERCENTAGES ON DEPARTMENTAL MARGIN STATEMENTSDEPARTMENTAL MARGIN STATEMENTS
Net SalesDepartmental
MarginComponent Percentage for Departmental Margin
÷ =
$49,222.61 ÷ = 14.3%$344,476.46
Component Percentages20X3 20X2 20X1
Departmental Margin 14.3% 13.4% 13.1%
page 112
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LESSON 4-4
DEPARTMENTAL MARGIN DEPARTMENTAL MARGIN STATEMENTSTATEMENT—VIDEO—VIDEO page 113
1. Determine net sales for department.
2. Determine cost of merchandise sold for department.
3. Calculate gross profit.
4. Record direct expenses of the department.
5. Calculate the departmental margin.
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LESSON 4-4
INCOME STATEMENT WITH INCOME STATEMENT WITH DEPARTMENTAL MARGINDEPARTMENTAL MARGIN
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1.Prepare the heading.2-6.Use information from the departmental margin statements.7.Use information from the Income Statement columns of the work sheet.
8.Complete the income statement.
9.Calculate component percentages.
page 114
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LESSON 4-4
STATEMENT OF STATEMENT OF STOCKHOLDERS’ EQUITYSTOCKHOLDERS’ EQUITY page 115
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LESSON 4-4
BALANCE SHEETBALANCE SHEET page 116
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LESSON 4-4
BALANCE SHEETBALANCE SHEET page 116
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 4-5LESSON 4-5
End-of-Period Work for a Departmentalized Business
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LESSON 4-5
TERMS REVIEWTERMS REVIEW
adjusting entries closing entries post-closing trial balance accounting cycle
page 117
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LESSON 4-5
2. Enter the adjusting entries without additional explanation.
JOURNALIZING ADJUSTING ENTRIES FOR A JOURNALIZING ADJUSTING ENTRIES FOR A DEPARTMENTALIZED BUSINESSDEPARTMENTALIZED BUSINESS page 118
1. Write Adjusting Entries in the Account Title column.
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LESSON 4-5
JOURNALIZING CLOSING ENTRIES FOR A JOURNALIZING CLOSING ENTRIES FOR A DEPARTMENTALIZED BUSINESSDEPARTMENTALIZED BUSINESS page 119
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1. Write Closing Entries in Account Title column.
2. Record entry to close income statement accounts with credit balances.
3. Write (continued on general journal page 15) to show that the closing entries are continued.
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LESSON 4-5
JOURNALIZING CLOSING ENTRIES FOR A JOURNALIZING CLOSING ENTRIES FOR A DEPARTMENTALIZED BUSINESSDEPARTMENTALIZED BUSINESS page 120
4. Write Closing Entries (continued) in the Account Title column.
5. Record entry to close income statement accounts with debit balances.
6. Record entry to close Income Summary to Retained Earnings.
7. Record entry for Dividends.
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LESSON 4-5
POST-CLOSING TRIAL BALANCE FOR A POST-CLOSING TRIAL BALANCE FOR A DEPARTMENTALIZED BUSINESSDEPARTMENTALIZED BUSINESS page 122
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LESSON 4-5
2. Record entries in journals.
SUMMARY OF ACCOUNTING CYCLESUMMARY OF ACCOUNTING CYCLE page 123
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993. Post journal entries to the ledgers.
9. Prepare a post-closing trial balance.
8. Journalize and post adjusting and closing entries.
7. Prepare financial statements.
6. Prepare a trial balance on the work sheet.
5. Prepare schedules of accounts receivable and accounts payable from the subsidiary ledgers.
4. Prepare interim departmental statement of gross profit.
1. Verify source documents for accuracy.