ACCT 200 1st Edition Lecture 13 Outline of Last Lecture I. Miscellaneous NotesII. BE 6-3III. FIFO, LIFO, Weighted-Average CostIV. BE 6-4, 6-5, 6-6, 6-8V. Inventory PurchasesVI. Sales Journal EntryOutline of Current Lecture I. E 6-4II. E 6-7III. COGSIV. E 6-12V. MiscellaneousCurrent LectureUnits $/unit totalJun 1 begin inventory 16 250 4000Jun 12 purchase 10 240 2400Jun 24 purchase 12 231.5 2778Jun 27 purchase 10 245 2450TOTAL 48 n/a 11,628Sold 30End inventory on hand 18E 6-4 FIFOSold On HandJun 1 16*250=4000Jun 12 10*240=2400Jun 24 4*231.5=926 8*231.5=1852Jun 27 10*245=2450TOTAL 7326 ($ value of COGS) 4302 ($ value of end inventory)LIFOSold On HandJun 1 16*250=4000Jun 12 8*240=1920 2*240=480Jun 24 12*231.5=2778Jun 27 10*245=2450TOTAL 7148 ($ value of COGS) 4480 ($ value of end inventory)Average Cost11,628/48=242.25 avg cost/unit30*242.25=COGS18*242.25=end inventoryE 6-7Purchase books on acct for 2300 terms 2/10 net 305/2 Inventory 2300Acct payable 2300Pay freight charges on 5/2 purchase (100)5/2 Inventory 100Cash 100(Freight in/getting purchases – always part of inventory; freight out/to customers – always delivery expense)Return $300 books 5/3 Acct payable 300Inventory 300Pay full balance due (2300-300=2000; within discount period so 2000*.02=40 discount)5/10 Acct payable 2000Cash 1960Inventory 40(Discounts on purchases of inventory reduce inventory – definitely will be on exam!!)Sell books for 300 (cost is 2060: 2000-40 discount+100 freight)5/15 Acct receivable 3000Revenue 3000COGS 2060Inventory 2060(If customer pays and takes discount) – 5/20 Cash 2940Sales discount 60Acct receivable 3000COGSBegin inventory + purchase – purchase returns – purchase discount + freight charges – end inventory=COGSE 6-12Sales revenue 250,000Gain on sale of land 100,000Selling expenses 50,000General expenses 20,000COGS 180,000Admin expenses 30,000Multi-Step Income StatementSales revenue 250,000-sales returns/discounts 0Net sales= 250,000-COGS -180,000Gross profit= 70,000Expenses – Selling -50,000Admin -30,000General -40,000Total expenses= 120,000Operating income=gross profit-total expenses=70,000 - 120,000= -50,000 (operating loss)+gain on land sale 100,000+interest income 0-interest expense 0Income before taxes=operating income+100,000=50,000Income tax expense=20,000Net income=30,000Miscellaneous:What is NOT included in operating expenses?Gain/loss on sale of ______ (e.g. land)Interest income/revenueInterest expenseNon-operating items: income tax expenseInventory value changes – example, iPhone 4 value goes down when iPhone 5 comes out Take loss right awayIf inventory falls below cost, change to market
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