End of chapter 6- Chapter 7
End of chapter 6- Chapter 7 ACCT 2010
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This 3 page Class Notes was uploaded by Annie Danyluk on Monday October 12, 2015. The Class Notes belongs to ACCT 2010 at Clemson University taught by Professor Annieka C Philo in Fall 2015. Since its upload, it has received 21 views. For similar materials see Financial Accounting Concepts in Accounting at Clemson University.
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Date Created: 10/12/15
Chapter 7 09302015 Remember these entries Ch 6 January 52013 0 Buy inventory from a vendor 0 Entry 0 Debit inventory Credit cash or accounts payable 0 Sell inventory from your company to your customer 0 Debit cash or accounts receivable Credit Sales revenue 0 Debi cost of goods sold Credit inventory Objective 0 Describe the issues in managing different types of inventory Inventory management decisions 0 The primary goals of inventory managers are to 0 Maintain a suf cient quantity of inventory to meet customers needs 0 Ensure quality meets customers expectations and company standards 0 Minimize the costs of acquiring and carrying the inventory Types of inventory Merchandisers 0 Buy nished goods 0 Sell nished goods 0 Merchandise inventory 0 Manufacturers 0 Buy raw materials 0 Produce and sell nished goods 0 lRaw materials Materials waiting to be processed 0 Work in progress Partially complete products 0 lFinished goods Completed products awaiting sale Learning objective 72 0 Explain how to report inventory and cost of goods sold Balance sheet and Income statement reporting 0 Inventory is on the balance sheet and is current asset Cost of goods sold is on the income statement Cost of goods sold equation MEMORIZE THIS 0 Beginning inventory 0 Add purchases Subtract cost of goods sold 0 ending inventory Your turn 0 Winter inc Provided the following data 0 Sales 600000 0 Beginning inventory 50000 0 Ending inventory 55000 0 Gross margin 250000 0 What was the amount of inventory purchased during the year 0 50000purchasescost of goods sold55000 o SalesCost of goods soldGross margin 600000Cost of goods sold250000 Cost of goods sold350000 50000purchases35000055000 o purchases355000 Learning objective 0 Compute inventory costs in perpetual systems Inventory costing methods 0 Speci c identi cation 0 Firstin Firstout FIFO 0 Inventory ows out in the order that they are received 0 The oldest cost in our system to be used to calculate cost of goods sold 0 Lastin Firstout LIFO o The last items received in are the rst items to be sold 0 The last cost in your inventory system is the rst to be used Weighted average 0 Calculate an average cost Remember these entries 0 The ones in the beginning of the notes 0 On the second journal entry part 2 we need to gure out how to calculate the amount that goes into entry 2 How much of that inventory used Example Perpetual inventory OOO