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by: Catherine Feeney

ACCT 2010 CHAPTER 6 ACCT 2010 (Accounting, Dr. Kohlmeyer)

Catherine Feeney
Financial Concepts
Dr. Kohlmeyer

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Financial Concepts
Dr. Kohlmeyer
Class Notes
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This 3 page Class Notes was uploaded by Catherine Feeney on Wednesday September 23, 2015. The Class Notes belongs to ACCT 2010 (Accounting, Dr. Kohlmeyer) at Clemson University taught by Dr. Kohlmeyer in Fall 2015. Since its upload, it has received 31 views. For similar materials see Financial Concepts in Accounting at Clemson University.

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Date Created: 09/23/15
Chapter 6 Merchandizer could be app walmart target anyone We must track the inventory We are interested in the quantity and the cost They had inventory and now that they made sale that has been reduced So asset reduced and then the sale is a revenue and that goes on income statement Then you have COGS cost of good sold thats the amount the item sold cost the merchandizer to make them Revenue Expenses Net Income Sae COGs net income Perpetual know this more When you have continuous updating Ex when you pay for items at the food store the inventory is automatically updated You still do a physical account at the end of the month Periotic System inventory that hasn t been sold and is still on hand and they count it periodically say at the end of the month A system where the inventory is on hand and you only update it once a month at the end COGA cost of goods available COGS cost of goods sold Beging inventory Purchases COGA COGA Ending Inventory COGS On Income statement you want to come up with the COGS FOB Shipping Point 1 When does title transfer as soon as it leaves one dock in route to the other Shipping point 2 Who pays for shipping cost Who ever owns it pays the shipping 3 When is item inventory on balance sheet FOB Destination Point 1 the ownership title transfers when it reaches its nal destination 2 Since the original owner still owns it while its in transfer they pay for the shipping 3 When is item inventory off balance sheet when it is actually sold M3 Page 276 M63 Items Included in Inventory Explain whether the following items should be included in the inventory ofThe 0 Knot Inc a company that arranges and supplies wedding services for couples and other wedding consultants Goods are being held by The Knot on consignment from Emerald Bridal Goods in transit to Winston Wedding Consultants sold by The Knot FOB shipping point Goods in transit to The Knot purchased by The Knot FOB shipping point a Yes still include in inventory b No do not include in inventory As soon as it ships to Winston they own it so it is on there inventory c Yes include in inventory because when it is shipped it becomes part of their inventory Freight ln Cost that the customer pays when its FOB shipping point Freight in is an inventory and asset Freight Out not inventory it is a selling expense Income Statement Exhibit 9 Page 268 Gross Pro t Percentage of your net sales what percentage are you going to get gross pro t What bang for the buck are you going to get For every dollar of sales how much are you making Gross Pro t Percentage Net Sales COGS Net Sales times 100 The gross pro t percentage measures the percentage of pro t earned on each dollar of sales A higher gross pro t percentage means that th e company is selling products for a greater markup over its cost This r atio can be used to 1 analyze changes in the company39s operations 0 ver time 2 compare one company to another and 3 determine whe ther a company is earning enough on each sale to cover its operating e xpenses Exercise 22 Page 283 1 2 GP is 384 So for every dollar of sales you can 384 cents of gross product That just from their sales theey still have to pay people 3 This means it went down from the year before meaning they made Connect Questions 1 Which of the following bank reconciliation items would not result in an adjusting journal entry in the company39s books Outstanding Checks DigDug Corporation had outstanding checks totaling 5500 on its June bank reconciliation In July DigDug issued checks totaling 39900 The July bank statement shows that 27800 in checks cleared the bank in July The amount of outstanding checks on DigDug39s July bank reconciliation should be 17600 On October 31 2013 the bank39s records say that your company has 1375673 in its checking account You are aware of three outstanding checks for a total of 331219 During October 2013 the bank rejected two deposited checks from customers totaling 85419 because of insufficient funds and charged you 2800 in service fees You had not yet received notice about the bad checks but you were aware of and have recorded the 2800 of service fees Prior to adjustment on October 31 2013 your Cash account would have a balance of 1129873


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