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UA ACCT 200 - ch 5 student slides(2)

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PowerPoint PresentationMerchandising OperationsSlide 3Slide 4Slide 5Slide 6Slide 7Recording Purchases of MerchandiseSlide 9Slide 10Slide 11Slide 12Slide 13Slide 14Slide 15Slide 16Slide 17Slide 18Slide 19Slide 20practiceRecording Sales of MerchandiseSlide 23Slide 24Slide 25Slide 26Slide 27Slide 28Slide 29Slide 30Slide 31Purchase and Seller JE’sIncome Statement PresentationSlide 34Slide 35Slide 36Multiple- StepSlide 38Slide 39Slide 40Slide 41Slide 42Slide 43Prepare a multistep income statementEvaluating ProfitabilitySlide 46Slide 47Slide 48Slide 49Slide 50Slide 51Slide 52Slide 53Copyright5-1Preview of Chapter 5Financial AccountingSeventh EditionKimmel Weygandt Kieso5-2Merchandising OperationsMerchandising OperationsMerchandising OperationsMerchandising OperationsLO 1 Identify the differences between service and merchandising companies.Merchandising CompaniesBuy and Sell Goods Wholesaler ConsumerThe primary source of revenues is referred to as ________________________Retailer5-3Merchandising OperationsMerchandising OperationsMerchandising OperationsMerchandising OperationsLO 1 Identify the differences between service and merchandising companies.Income MeasurementCost of goods sold is the total __________________________sold during the period.Not used in a Service business.Net Income (Loss)LessLessEqualsEqualsSalesRevenueCost of Goods SoldGross ProfitOperating ExpensesIllustration 5-1 Income measurement process for a merchandising company5-4Flow of Costs Companies use either a perpetual inventory system or a periodic inventory system to account for inventory.LO 1 Identify the differences between service and merchandising companies.Merchandising OperationsMerchandising OperationsMerchandising OperationsMerchandising OperationsIllustration 5-35-5Perpetual SystemLO 1 Identify the differences between service and merchandising companies.Merchandising OperationsMerchandising OperationsMerchandising OperationsMerchandising OperationsMaintain detailed records of the cost of ________________purchase and sale.Records _____________ show inventory that should be on hand for every item.Company determines ________________ each time a sale occurs.Flow of Costs5-6Do not keep detailed records of the goods on hand.Cost of goods sold determined by count at the end of the accounting period.Calculation of Cost of Goods Sold:Beginning inventory$ 100,000Add: ______________800,000Goods available for sale900,000Less: ______________125,000____________________$ 775,000LO 1Merchandising OperationsMerchandising OperationsMerchandising OperationsMerchandising OperationsFlow of Costs Periodic System5-7Traditionally used for merchandise with high unit values.Shows the quantity and cost of the inventory that should be on hand at any time.Provides better control over inventories than a periodic system.LO 1 Identify the differences between service and merchandising companies.Merchandising OperationsMerchandising OperationsMerchandising OperationsMerchandising OperationsFlow of Costs Advantages of the Perpetual System5-8Made using __________________________Recording Purchases of MerchandiseRecording Purchases of MerchandiseRecording Purchases of MerchandiseRecording Purchases of MerchandiseLO 2 Explain the recording of purchases under a perpetual inventory system.Normally record when goods are received from the seller.Purchase invoice should support each credit purchase.Illustration 5-55-9Illustration: Sauk Stereo (the buyer) uses as a purchase invoice the sales invoice prepared by PW Audio Supply, Inc. (the seller). Prepare the journal entry for Sauk Stereo for the invoice from PW Audio Supply.__________________ 3,800May 4___________________ 3,800LO 2 Explain the recording of purchases under a perpetual inventory system.Recording Purchases of MerchandiseRecording Purchases of MerchandiseRecording Purchases of MerchandiseRecording Purchases of MerchandiseIllustration 5-55-10Illustration 5-6 Shipping termsOwnership of the goods passes to the buyer when the public carrier accepts the goods from the seller.Ownership of the goods remains with the seller until the goods reach the buyer.Recording Purchases of MerchandiseRecording Purchases of MerchandiseRecording Purchases of MerchandiseRecording Purchases of MerchandiseFreight Costs – Terms of Sale Freight costs incurred by the seller are an ____________________.LO 25-11Illustration: Assume upon delivery of the goods on May 6, Sauk Stereo pays Public Freight Company $150 for freight charges, the entry on Sauk Stereo’s books is:___________________ 150May 6Cash 150Recording Purchases of MerchandiseRecording Purchases of MerchandiseRecording Purchases of MerchandiseRecording Purchases of MerchandiseLO 2 Explain the recording of purchases under a perpetual inventory system.5-12Purchaser may be dissatisfied because goods are damaged or defective, of inferior quality, or do not meet specifications.Purchase Returns and AllowancesRecording Purchases of MerchandiseRecording Purchases of MerchandiseRecording Purchases of MerchandiseRecording Purchases of MerchandiseReturn goods for credit if the sale was made on credit, or for a cash refund if the purchase was for cash.May choose to keep the merchandise if the seller will grant a reduction of the purchase price.Purchase ReturnPurchase AllowanceLO 2 Explain the recording of purchases under a perpetual inventory system.5-13Recording Purchases of MerchandiseRecording Purchases of MerchandiseRecording Purchases of MerchandiseRecording Purchases of MerchandiseLO 2 Explain the recording of purchases under a perpetual inventory system.Illustration: Assume Sauk Stereo returned goods costing $300 to PW Audio Supply on May 8._________________ 300May 8________________________ 3005-14In a perpetual inventory system, a return of defective merchandise by a purchaser is recorded by crediting: a. Purchases b. Purchase Returns c. Purchase Allowance d. InventoryRecording Purchases of MerchandiseRecording Purchases of MerchandiseRecording Purchases of MerchandiseRecording Purchases of MerchandiseLO 2 Explain the recording of purchases under a perpetual inventory system.Review Question5-15Credit terms may permit buyer to claim a cash discount for prompt payment.Advantages:Purchaser _______________.Seller ___________________.Purchase Discounts Recording Purchases of MerchandiseRecording Purchases of MerchandiseRecording Purchases of MerchandiseRecording Purchases of


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UA ACCT 200 - ch 5 student slides(2)

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