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WESTERN OREGON UNIVERSITY / Business / Bus 20261 / What does inventory refer to in merchandising?

What does inventory refer to in merchandising?

What does inventory refer to in merchandising?

Description

School: Western Oregon University
Department: Business
Course: Financial Acct
Professor: Krislen-adams
Term: Winter 2016
Tags: Accounting and merchandising
Cost: Free
Name: Financial Accounting Chapter 5
Description: Chapter 5 covers Merchandising
Uploaded: 02/09/2016
4 Pages 188 Views 0 Unlocks
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Chapter 5 - Merchandising

  • Inventory - supplies we intend to sell
  • Asset when you have it
  • Expense when you sell it
  • Cost of goods sold (CGS)
  • Expense account for inventory
  • EXamples:        CGS        50

Inventory 50

  • Sales
  • Revenue account
  • Gross profit - difference between how much we sell it for and how much we paid for it (sales - CGS = Gross profit)
  • Aka “gross margin”
  • Examples: sales        $30        100%

Less: CGS                20        107%
Gross profit                10        33%

  • Gross profit divided by net sales = percentage
  • Example: bought 10 shirts $20 each
  • Perpetual system - can look up cost of inventory shows actual cost including getting the inventory to you (uses computer system)

InvWe also discuss several other topics like What are the types of recombination?

200 --        shirts are $20 each

10 --        $10 in shipping (transportation in)

210 --        with shipping included now, shifts are $21

  • Cash discounts - if we pay back our invoice (bill) within a certain time period we can get a discount
  • Written on invoice in shorthand as:

2/10,                         n/30We also discuss several other topics like What is meant by sleep debt?

        2% of if paid in 10 days        no discount option, must pay in 30 days

Example: 2-8 inv        1000

        A/P                1000

        (2/10)We also discuss several other topics like What is meant by Philosophical logic?

        2-15 A/P        1000

        Cash                980

        Inv                20

Inv                        A/PIf you want to learn more check out ds=rdθ

1000                 | 20                1000 | 1000

(50at $20        |                        |

980                |                        | 0

(50 at $19.60)We also discuss several other topics like Name the five processes in Mergeresort 5.

Sell shirtIf you want to learn more check out What pertains to the volume of the red blood cells in the blood?

Cash                30

Sales                30

CGS                 19.60                        sales                      CGS

Inv                19.60                            |30                19.60 |

Example: sales discount - to customers to have them (pay bill sooner, contra revenue)

        A/R                700

        Sales                700

(3 / 15, n / 45)

        CGS                500

        Inv                500

        

Inv                                        A/R                        sales

1000                | 500                700        | 700                        | 700

(50 at $20        |                        |                        |

500                |                0        |                        |

(25 at $20)         |        

CGS

500

Paid within 15 days:                                Sales Discount

21         |

Cash                         679                                        |

Sales Discounts        21                                        |

A / R                         700
- sales return and allowances - contra revenue, returns of refund money after negotiation

  • Invoice includes:
  • Transportation
  • FOB (free on board) shipping point - as soon as manufacturer ships items, sale is complete
  • FOB destination - sale not complete until product is received, shipping cost paid by manufacturer

Periodic System

  • Mom and pop stores use
  • Doesn’t update: inventory after every sale
  • Uses account “purchases” to get more supplies temporary account
  • Estimates CGS

Example:  cash                1800

             Sales                1800

Purchases                5500

Cash                        5500

Inv                                purchases                                sales

5000        |                        5000        |                                | 1800

        |                                |                                |

CGS                        - beg inv and purchases                5000

9500        |                                                        5500

        |                        available inv                -         10,500

- Ending inv (physically count) (1000)

                        - equals CGS (estimate)  = 9500

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