Contrast Periodic And Perpetual

1,587 views

Published on

Published in: Economy & Finance, Business
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,587
On SlideShare
0
From Embeds
0
Number of Embeds
16
Actions
Shares
0
Downloads
78
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Contrast Periodic And Perpetual

  1. 1. Inventory Systems
  2. 2. Chapter 6 I. This Week A. pp. 223 – 233 and Appendix 6A B. Contrast periodic and perpetual C. Financial statement preparation and formulas II. Fall Break III. Week After Break A. pp. 233 – 249 B. Appendix 6B and Appredix 6C
  3. 3. Chapter 6 I. This Week A. Chap 5, pp. pp. 200-213 Chap 5, Appendix 5A Chap 6, pp. 228-233 B. Contrast periodic and perpetual C. Financial statement preparation and formulas II. Fall Break III. Week After Break A. Chap 6, pp. 233 – 247 B. Appendix 6A and Appendix 6B
  4. 4. Chapter 6 I. This Week A. Chap 5, pp. pp. 200-213 Chap 5, Appendix 5A Chap 6, pp. 228-233 B. Contrast periodic and perpetual C. Financial statement preparation and formulas II. Fall Break III. Week After Break A. Chap 6, pp. 233 – 247 B. Appendix 6A and Appendix 6B
  5. 5. Contrast Periodic and Perpetual
  6. 6. Merchandising periodic perpetual
  7. 8. Merchandising periodic perpetual Review New
  8. 9. What’s New? <ul><li>new accounts </li></ul><ul><li>new look for transactions </li></ul><ul><li>new details on Income Statement </li></ul>
  9. 10. New Accounts goods for resale co $ t Purchases contra contra “ sub” Merchandise Inventory Purchase Returns and Allowances Purchase Discounts Freight-In
  10. 11. New Accounts retail contra contra Same Old Sales Sales Returns and Allowances Sales Discounts
  11. 12. New Accounts Cost of Goods Sold expense No Such
  12. 13. New Transactions (buyer’s point of view) Purchased merchandise from Seller, Inc., FOB shipping point, 2/10,n/30, $1,000. Purchases Look to Date Account Title Ref Debit Credit Merchandise Inventory 1,000 1,000 Accounts Payable
  13. 14. New Transactions (buyer’s point of view) Paid Mack Trucking Company for freight charges, $100. Freight-In Look to Date Account Title Ref Debit Credit Merchandise Inventory 100 100 Cash
  14. 15. New Transactions (buyer’s point of view) Returned $200 of defective goods, receiving credit. Purchases Returns and Allowances Look to Date Account Title Ref Debit Credit Merchandise Inventory 200 200 Accounts Payable
  15. 16. New Transactions (buyer’s point of view) Paid the balance due within the discount period. Purchase Discount Look to Date Account Title Ref Debit Credit Accounts Payable Merchandise Inventory 800 16 Cash 784
  16. 17. New Accounts Purchases Invoice 1,000 Cost Freight-In 100 Pur Disc 16 Purchase Returns and Allowances 200
  17. 18. New Transactions (seller’s point of view) Sold merchandise (costing $60) to Buyer Co., FOB shipping point, 1/10,n/30, $100. Accounts Receivable 100 100 Sales Periodic requires only one entry. Date Account Title Ref Debit Credit Cost of Goods Sold Merchandise Inventory 60 60
  18. 19. New Transactions (seller’s point of view) Issued a credit memo to Buyer for goods returned, $20 ($12 cost). Sales Returns and Allow. 20 20 Accounts Receivable Periodic only requires one entry. Date Account Title Ref Debit Credit Merchandise Inventory Cost of Goods Sold 12 12
  19. 20. Summary of Periodic <ul><li>PURCHASES account is debited when goods are acquired. </li></ul><ul><li>SALES is credited to record the sales price of the goods sold, but no entry is made to reduce inventory </li></ul><ul><li>THEREFORE </li></ul><ul><li>Must COMPUTE Cost of Goods Sold in order to find Net Income. </li></ul>
  20. 21. Financial Statement Formulas
  21. 22. Financial Statements Some Company Income Statement For the Year Ended 12/31/xx Sales $ xxx,xxx Cost of Goods Sold xx,xxx GROSS PROFIT $ x,xxx Sales ¹ - Cost of Goods Sold ² = Gross Profit
  22. 23. ¹ “Sales” means “ net sales”
  23. 24. New Accounts retail contra contra Same Old Sales Sales Returns and Allowances Sales Discounts
  24. 25. Financial Statements Some Company Income Statement For the Year Ended 12/31/xx Sales $ xxx,xxx Less: SR&A x,xxx S Disc xxx x,xxx Net Sales $ xxx,xxx Cost of Goods Sold xx,xxx GROSS PROFIT $ x,xxx
  25. 26. ² Cost of Goods Sold Beginning Inventory + Purchases ³ = Goods Available for Sale - Ending Inventory = Cost of Goods Sold It’s a formula… not an account!
  26. 27. “ Purchases”
  27. 28. ³ “Purchases” means “ net purchases”
  28. 29. New Accounts goods for resale co $ t contra contra Purchases Purchase Returns and Allowances Purchase Discounts Freight-In
  29. 30. ³ “Purchases” means “Net Purchases” Gregg & Wilson Purchases + Freight-In - Pur Ret & Allow - Pur Discounts = Net Purchases Weygandt, Kieso, Kimmel Purchases - Pur Ret & Allow - Pur Discounts = Net Purchases + Freight-In = Cost of Goods Purchased
  30. 31. New Accounts goods for resale co $ t contra contra Purchases Purchase Returns and Allowances Purchase Discounts Freight-In
  31. 32. ³ “Purchases” means “Net Purchases” Gregg & Wilson Purchases + Freight-In - Pur Ret & Allow - Pur Discounts = Net Purchases Weygandt, Kieso, Kimmel Purchases - Pur Ret & Allow - Pur Discounts = Net Purchases + Freight-In = Cost of Goods Purchased Go With This!
  32. 33. OUR Company
  33. 34. Beginning Inventory Purchases Ending Inventory Cost of Goods Sold Goods Available For Sale
  34. 35. Beginning Inventory Purchases Ending Inventory Cost of Goods Sold Goods Available For Sale
  35. 36. B I + P = GAFS - EI = COGS
  36. 37. B I + P = GAFS - EI = COGS
  37. 38. Beginning Inventory Purchases GAFS Ending Inventory COGS To Balance Sheet To Income Statement
  38. 39. Practice Exercise
  39. 40. Revision
  40. 41. Revision January 1 was…
  41. 42. Revision
  42. 43. Revision $30,000 $22,000
  43. 44. From the list of accounts in the handout, prepare an income statement through gross profit.
  44. 45. Where do we start? What’s the first thing you do when you prepare an Income Statement?
  45. 51. Beginning Inventory Purchases Ending Inventory Cost of Goods Sold Goods Available For Sale
  46. 52. B I + P = GAFS - EI = COGS
  47. 57. ³ “Purchases” means “Net Purchases” Gregg & Wilson Purchases + Freight-In - Pur Ret & Allow - Pur Discounts = Net Purchases Weygandt, Kieso, Kimmel Purchases - Pur Ret & Allow - Pur Discounts = Net Purchases + Freight-In = Cost of Goods Purchased Go With This!
  48. 60. B I + P = GAFS - EI = COGS
  49. 64. B I + P = GAFS - EI = COGS
  50. 66. Who learned something today?
  51. 67. Have a great day…
  52. 68. … a great week…
  53. 69. … and a FABULOUS fall break!

×