Akaun Chapter 5

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Akaun Chapter 5

  1. 1. Chapter Five ACCOUNTING FOR MERCHANDISING BUSINESSES
  2. 2. Outline <ul><li>Merchandising Business Environment </li></ul><ul><ul><li>Transaction for: </li></ul></ul><ul><ul><ul><li>Purchases </li></ul></ul></ul><ul><ul><ul><li>Sales </li></ul></ul></ul><ul><ul><ul><li>Discounts </li></ul></ul></ul><ul><ul><ul><li>Returns </li></ul></ul></ul><ul><ul><ul><li>Transportation Cost </li></ul></ul></ul><ul><li>Accounting For Inventory </li></ul><ul><ul><li>Periodic Inventory System </li></ul></ul><ul><ul><li>Perpetual Inventory System </li></ul></ul><ul><li>Forms of Financial Statements </li></ul>
  3. 3. Merchandising Businesses <ul><li>A merchandising company is an enterprise that buys and </li></ul><ul><li>sells goods to earn a profit. </li></ul>1) Wholesalers sell to retailers 2) Retailers sell to consumers <ul><li>A merchandiser’s primary source of revenue is sales. </li></ul>
  4. 4. Merchandising Businesses Expenses Cost of Goods Sold Operating Expenses Total cost of merchandise sold during the period. Expenses incurred in the process of earning sales revenue
  5. 5. Merchandising Businesses Sales Revenue Less Cost of Goods Sold Gross Profit Less Operating Expenses Net Income / Loss Equals Equals
  6. 6. Merchandising Businesses Transactions <ul><li>Purchases </li></ul><ul><li>Sales </li></ul><ul><li>Discounts </li></ul><ul><li>Returns </li></ul><ul><li>Transportation Cost </li></ul>
  7. 7. Purchases Purchase goods for resale purposes Cash Purchase Credit Purchase
  8. 8. Sales Sales of inventories Cash Sales Credit Sales
  9. 9. Discounts Incentive offers on purchases / sales Trade Discount Cash Discount Purchase Discount Sales Discount
  10. 10. Trade Discount Discounts offered for purchase in bulk Example Buy 100-200 unit = 10% Buy 201-300 unit = 20% No journal entries recorded.
  11. 11. Cash Discount Discounts offered for a prompt payment made within the discount period. It is stated in credit terms. Credit Term: 5/10, n/30 n/30 3/15, n/eom The amount is recorded in related accounts
  12. 12. Purchase Returns & Allowances Purchase Returns Purchase Allowances When merchandise is returned to the seller. When price adjustment is needed due to the quality / quantity of the merchandise.
  13. 13. Sales Returns & Allowances Sales Returns Sales Allowance When merchandise is returned by customer. When price adjustment is needed by customer due to the quality / quantity of the merchandise.
  14. 14. Transportation Cost The sales agreement would indicate whether the buyer or the seller is to pay the cost of transporting the goods to the buyer’s place. Freight terms: FOB Shipping Point FOB Destination
  15. 15. FOB Shipping Point Seller Transport Company Buyer Transportation cost to be borne / paid by the buyer. Ownership changed to buyer
  16. 16. FOB Destination Seller Transport Company Buyer Cost to be borne / paid by the seller. Ownership transferred
  17. 17. Accounting For Inventory Periodic Inventory System Perpetual Inventory System Detailed records of the cost of each item are maintained, and the cost of each item sold is determined from records when the sale occurs. Cost of goods sold is determined only at the end of an accounting period.
  18. 18. Cost of Goods Sold <ul><li>The cost of goods sold may be determined each time </li></ul><ul><li>a sale occurs or at the end of an accounting period. </li></ul><ul><li>To make the determination when the sale occurs, </li></ul><ul><li>a company uses a perpetual inventory system. </li></ul><ul><li>When the cost of goods sold is determined only at the </li></ul><ul><li>end of an accounting period, a company is said to be </li></ul><ul><li>using a periodic inventory system. </li></ul>
  19. 19. Determination Cost of Goods Sold Under Periodic Inventory System Less: cost of goods on hand at the end of the accounting period (xxxx) Cost of goods on hand at the beginning of the accounting period. xxx Add: cost of goods purchased xxxxx xxxxx Cost of Goods Sold xxxxx
  20. 20. Entries Under Perpertual Inventory System Purchases Purchase Return Purchase Discount Transportation Cost Sales Sales Return Sales Discount Transportation Cost
  21. 21. Purchases Cash Purchase: Credit Purchase: Dr. Inventory Dr. Inventory Cr. Cash Cr. Account Payable
  22. 22. Purchase Returns & Allowances Dr. Account Payable Cr. Inventory Cash Purchase: Credit Purchase: Dr. Cash Cr. Inventory
  23. 23. Purchase Discount Dr. Account Payable Cr. Cash Cr. Inventory
  24. 24. Transportation Cost Dr. Inventory Cr. Cash / Account Payable
  25. 25. Sales Cash Sale: Dr. Cash Dr. Cost of Goods Sold Cr. Sales Cr. Inventory ( to record sales at selling price ) ( to record cost of goods sold )
  26. 26. Sales Credit Sale: Dr. Account Receivable Dr. Cost of Goods Sold Cr. Sales Cr. Inventory ( to record sales at selling price ) ( to record cost of goods sold )
  27. 27. Sales Returns & Allowances Cash Sale: Dr. Sales Returns & Allowances Dr. Inventory Cr. Cash Cr. Cost of Goods Sold ( to record sales returns & allowances at selling price ) ( to record sales returns & allowances at cost )
  28. 28. Sales Returns & Allowances Credit Sale: Dr. Sales Returns & Allowances Dr. Inventory Cr. Account Receivable Cr. Cost of Goods Sold ( to record sales returns & allowances at selling price ) ( to record sales returns & allowances at cost )
  29. 29. Sales Discounts Dr. Sales Discount Dr. Cash Cr. Account Receivable
  30. 30. Transportation Cost Dr. Carriage Outwards Cr. Cash / Accounts Payables
  31. 31. Forms of Financial Statements Single-Step Income Statement Multiple-Step Income Statement
  32. 32. Multiple-Step Income Statement Involves 2 steps in determining net income / loss. Step 1: Net Sales xxxxx Less : Cost of Goods Sold (xxx) Gross Profit xxxx Step 2: Less: Operating Expenses Net Income / Loss xxx Selling Expenses Administrative Expenses xxxx
  33. 33. Multiple-Step Income Statement It also distinguishes between operating and non-operating activities. Operating activities Non-operating activities Revenues and expenses from normal operations (merchandising) <ul><li>Revenues and expenses from </li></ul><ul><li>auxiliary operations. </li></ul>2. Gains and losses that are unrelated to the company’s operations.
  34. 34. Multiple-Step Income Statement Sales Revenue xxxx Less: Cost of Goods Sold (xxx) Gross Profit xxxx Less: Operating Expenses Selling Expenses Administrative Expenses xxxx Income From Operations xxxx Other Revenues and gains xxx Less: Other Expenses and losses (xx) Net Income xxx xxx
  35. 35. Single-Step Income Statement Involves only one step in determining net income / loss. Total Revenues (operating & non-operating) xxxx Less: Total Expenses (Operating & non-operating) xxxx Net Income xxxx
  36. 36. Thank You

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