ACCT 200 Outline of Last Lecture I Some Equations II EP 2 III 8 17 IV 8 18 V 8 22 Outline of Current Lecture I Terms II Multi Step Income Statement III Slide 9 Problem Current Lecture I Terms a Merchandisers buy and sell goods b Selling expense sales person salaries c Administrative expense janitors secretaries supplies expense accountants wages of warehouse personnel d Other income and other expense non core operations e Sales returns and allowances contra revenue subtracted from sales negative balance i Valuation accounts to accurately state the true sales amount f Purchase returns and allowances contra inventory subtracted from inventory on buyer s balance sheet i Not preset amounts negotiated on situational basis These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute g Sales discounts contra revenue with negative balance always subtracted from gross sales h Purchase discounts contra inventory always subtracted from buyer s inventory i Discounts look like this 2 10 net 30 i 2 discount offered ii 10 number of days amount should be paid in in order to receive discount iii net 30 the full payment is due within thirty days if not paid during the discount period j Buyer s cost of inventory on balance sheet cash actually paid for inventory k MOST MISSED ON FINAL EXAM FREIGHT COST i FOB free on board ii FOB shipping point shipping cost paid for by the buyer iii FOB destination shipping cost paid for by the seller iv To remember this think of the shipping point or destination as the time at which the ownership of property is switched An item is always originally owned by the seller If the ownership switches at the shipping point then the buyer owns the item as it is en route If the ownership does not switch until the item reaches its destination then the owner still owns the item while it is en route II Multi Step Income Statement Revenue i Sales ii Returns and allowances iii Sales discounts iv Net Sales Expenses v cost of merchandise sold expense Gross Profit Net sales cost of goods sold expense profit earned directly from selling of merchandise contributes to covering a company s other expenses Operating Expenses vi selling expenses vii administrative expenses Income from operations core business Other income rent revenue Other expenses Net Income III Slide 9 Problem a Buyer pays shipping 4600 50 4650 merchandise inventory on B S b seller pays shipping 4600
View Full Document
Unlocking...