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AC102 PPT1 - Merchandising Business (PPT from Sir Leandro Fua)
 

AC102 PPT1 - Merchandising Business (PPT from Sir Leandro Fua)

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    AC102 PPT1 - Merchandising Business (PPT from Sir Leandro Fua) AC102 PPT1 - Merchandising Business (PPT from Sir Leandro Fua) Presentation Transcript

    • MIRIAM COLLEGE College of Business, Entrepreneurship and Accountancy College of Business, Entrepreneurship and AccountancyBusiness Administration Department COURSE OUTLINE 2nd Semester, SY 2012-2013
    • College of Business, Entrepreneurship and Accountancy Course Code BSA – 102 Course TitlePrinciples of Accounting Part 2
    • Principles of Accounting, Part 1 College of Business, Entrepreneurship and AccountancyBusiness entities may engage in any of the following type of business.These are:1. Service business. This business renders services to customers or clients for a fee. Examples of service type of business are: public transport companies, beauty parlors, security agencies, repair shops, laundry shops, schools, medical or health clinics, event coordinators, law offices, accounting firms and advertising firms.2. Merchandising business or trading. This kind of business buys goods or commodities and sells the same at a profit. Examples are: grocery stores, supermarkets, hardware stores drugstores, car dealers, real estate dealers and appliance stores.3. Manufacturing business, This type makes finished goods from raw materials or unassembled parts. A manufacturing business produces the goods that it sells. Examples are: shoe factories, garment factories, car assembler and food processing plants.
    • Merchandise Inventory College of Business, Entrepreneurship and Accountancy• Merchandise – Goods that a Merchandising company sells to its customers regardless of the type of products the company sells• Merchandise Inventory – Is the cost of goods on hand available for sale at any given time
    • Business Documents College of Business, Entrepreneurship and Accountancy• Invoice – prepared by the seller – Contains detail of the sale • Quantity • Item Description • Unit Price • Total Price • Term of sale • Total Amount Sold • Manner of Shipment
    • College of Business, Entrepreneurship and Accountancy• Purchase Order – Prepared by the purchasing department – Sent to Supplier – Asking for items to be shipped to the purchaser• Receiving Report – Prepared by receiving department – Showing • Quantity • Item Description
    • Recording Sales College of Business, Entrepreneurship and Accountancy• Credit Memorandum – A note issued by the seller – Indicating amount and reason for the credit• Debit Memorandum – A note issued by the buyer who is returning the merchandise to the seller – Indicating the amount and reason for the debit
    • Trade Discount College of Business, Entrepreneurship and Accountancy• List Price – Original price quoted by the seller• Trade Discount – Discount given and deducted from the list price – Reduce the cost of the catalog price – Grant for quantity discount – Allow of quotation of different price• Chain Discount – Several trade discount granted to buyer
    • Recording Trade Discount College of Business, Entrepreneurship and Accountancy• List price – 1,000 umbrella at P100.00 P 100,000.00• Trade Discount Large Volume – 10% Volume discount 10,000.00 – (P 100,000.00 x 10%) P 90,000.00• Trade Discount – No Sales Invoice Discount – 7% No invoice Discount 6,300.00 – (P 90,000 x 7%) – Gross Invoice Price P 83,700.00
    • Sales (Cash) Discount College of Business, Entrepreneurship and Accountancy• Term of payment (Credit Term) – States when payment is to be made • n/30 means 30 days after the date of sale • n/45 means 45 days after the date of sale• Cash discount – A deduction from the gross invoice price that the buyer can take if he pays within a specified period of time • 2/10, n/30 • 3/EOM, /60
    • Recording Sales College of Business, Entrepreneurship and Accountancy• Sold 530 units for P7 each (Terms 2/15, n/90)• On Account Accounts Receivable 3,710.00 Sales 3,710.00• If paid within discount period Cash 3,635.80 Sales Discount 74.20 Accounts Receivable 3,710.00
    • Sales Return and Allowances College of Business, Entrepreneurship and Accountancy• Sales Return – Merchandise returned by a buyer that is considered a cancellation of sales• Sales Allowance – Is granted if the customer keeps the merchandise although dissatisfied• Entry Sales Return and Allowances xxx Accounts receivable xxx
    • Reporting Net Sales College of Business, Entrepreneurship and Accountancy Merchandise Company Comprehensive Income Statement For the Year ended December 31, 20XXRevenue from Sales Gross Sales P XXX Less : Sales Discount P XXX Sales Return and Allowances XXX XXX Net Sales P XXX
    • Inventories College of Business, Entrepreneurship and Accountancy Perpetual Inventory Systems• Inventory System wherein the inventory records are continuously updated for the following events – Purchases – Purchase Discounts Taken – Purchase Returns & Allowances – Sales (remove from inventory the COST of the units sold) – Sales Returns (add to inventory the COST of units returned)• Used by companies with high value merchandise• A physical count is done at the end of the year and is compared with the recorded balances on hand
    • College of Business, Entrepreneurship and Accountancy Periodic Inventory System• inventory transactions are not recorded directly in the Inventory account• Uses separate accounts for each transaction – Purchases – Purchase Returns & Allowances – Purchase Discounts – Transportation In• Used by companies with low value merchandise• A physical count is done at the end of the year and to determine the balance at the end of the period
    • Recording Purchases College of Business, Entrepreneurship and Accountancy• Purchased 530 units for P7 each (Terms 2/15,n/90)• On Account Purchases 3,710.00 Accounts Payable 3,710.00• If paid within discount period Accounts Payable 3,710.00 Purchase Discount 74.20 Cash 3,635.80
    • Purchase Return and Allowances College of Business, Entrepreneurship and Accountancy• Purchase Return – Merchandise returned by the buyer that is considered a cancellation of purchase• Purchase Allowance – Is granted if the customer keeps the merchandise although dissatisfied• Entry Accounts Payable xxx Purchase Return and Allowances xxx
    • Freight Charges / Delivery Cost College of Business, Entrepreneurship and Accountancy FOB Shipping Point FOB Destination Shipping Point Buyer Owns Shipment Destination Buyer Owns Shipment Who owns the shipment Buyer SellerShipment destroyed at sea Buyer Seller Transportation Cost Buyer Seller Freight Prepaid Seller pays the freight at the time of shipment Freight Collect Buyer pays the freight upon arrival of the goods
    • Physical Inventory College of Business, Entrepreneurship and Accountancy• Taking a physical inventory consists of counting the physical units of each type of merchandise on hand• Regardless of location – Goods shipped to a potential buyer “on approval” are not considered sold – Goods on consignment are not considered sold• Merchandise in transit – Merchandise in the hand of freight company on the date of the physical count depending on the passage of title
    • Cost of Goods Sold College of Business, Entrepreneurship and AccountancyCost of Goods sold Merchandise Inventory, Jan 1, 20XX P XXX Purchases P XXX Add transportation In XXX Delivered Cost of Merchandise Purchased P XXX Less : Purchase Discount P XXX Purchase Return and Allowances XXX XXX XXX Goods Available for Sale P XXX Less : Merchandise Inventory, Dec 31, 20XX XXX Cost of goods sold XXX
    • Value Added Tax College of Business, Entrepreneurship and Accountancy• Section 106 of the National Internal Revenue Code - 12% VAT on Sales of goods or properties• Section 106 of the National Internal Revenue Code - 12% VAT on Sales or exchange of services• The Liability to the government is recorded as follows: Cash 1,120.00 VAT Payable 120.00 Sales 1,000.00 To record sales of P 1,000.00 subject to 12% VAT