ACCT 200 1st Edition Lecture 15Outline of Last Lecture I. E 6-4II. E 6-7III. COGSIV. E 6-12V. MiscellaneousOutline of Current Lecture I. ReviewII. BE 6-16Current LectureReviewPurchase entries – purchase inventory to resell or related transactionsSales entries – sales to customers, returns or payments from customersPurchase inventory on acct, terms 2/10 net 30Dr inventory, Cr acct payableReturn of inventory purchasedDr acct payable, Cr inventoryPayment taking discountPurchase 4000, return 500, terms 2/10 net 30, pay and take discountOnly take discount on balance due when paying4000-500=3500 due; 3500*.02=70 discountDr Acct payable 3500Cr cash 3430Cr inventory 70BE 6-16Net sales 200,000COGS 140,000Begin inventory 45,000End inventory 35,000(Avg inventory=40,000)Turnover=COGS/avg inv=140,000/40,000=3.5 times (inventory turns over 3.5 times per year)Avg days in inventory=365/turnover=365/3.5=104.29 daysGross profit ratio=(net sales-COGS)/net
View Full Document