Inventory Systems Review of Inventory Systems Perpetual Inventory
- Slides: 14
Inventory Systems Review of Inventory Systems Perpetual Inventory System Periodic Inventory System
Accounting Cycle (Page 1 of 3) Transactions occur n Documents are created n Journalize the documents n Post from journals to general ledger (GL) and/or subsidiary ledgers n Prepare working trial balance-unadjusted trial balance from general ledger n
Accounting Cycle (Page 2 of 3) Develop adjusting journal entries (AJEs) n Enter AJEs on working trial balance n Extend working trial balance to derive adjusted trial balance n Complete working trial balance n u Income statement columns u Balance sheet columns n Prepare financial statements
Accounting Cycle (Page 3 of 3) Journalize AJEs in general journal n Post AJEs from general journal to ledgers n Journalize closing journal entries (CJEs) in general journal n Post CJEs from general journal to ledgers n Prepare post-closing trial balance n
Inventory Systems n Perpetual Inventory System u Balance sheet balance is always correct u Cost of goods sold account in GL n Periodic Inventory System u Balance sheet reflects beginning inventory u Multiple purchase related accounts in the GL
Perpetual Inventory System Journal Entries (Page 1 of 3) Purchases of inventory are recorded in the merchandise inventory account (ASSET) n Transportation costs on merchandise purchased are recorded in the merchandise inventory account n
Perpetual Inventory System Journal Entries (Page 2 of 3) All returns of inventory and reductions in purchase price due to discounts are recorded as deductions to the merchandise inventory account n Whenever a sale is made, TWO JOURNAL ENTRIES are needed. n u To record the Sale u To record Cost of Merchandise Sold
Perpetual Inventory System Journal Entries (Page 3 of 3) n Whenever a customer returns merchandise, TWO JOURNAL ENTRIES must be made u To record Sales Returns and Allowances u To record reduce Cost of Merchandise Sold
Income Statement n Revenue from Sales: u Sales u Less: Sales Returns & Allowances u Less: Sales Discounts u Net Sales Cost of Merchandise Sold n Gross Profit n
Periodic Inventory System Journal Entries (Page 1 of 3) The Merchandise Inventory Account reflects the beginning balance all year n Purchases of merchandise inventory are debited to the Purchases account n Sales of merchandise inventory are recorded with ONE JOURNAL ENTRY n u To record the sale of merchandise u No entry to record the cost of merchandise sold
Periodic Inventory System Journal Entries (Page 2 of 3) The Merchandise Inventory account in the GL is beginning inventory all year n There is no Cost of Merchandise Sold n Merchandise general ledger accounts: n u Purchases u Purchase returns and allowances u Purchase discounts u Transportation in
Periodic Inventory System Journal Entries (Page 3 of 3) n At year end u Inventory is counted u Merchandise Inventory account is: F credited to remove old balance F debited to record new balance u The off setting entries are posted to Income Summary account n Multi-Step Income Statement
Income Statement n Revenue from Sales: u Sales u Less: Sales Returns & Allowances u Less: Sales Discounts u Net Sales Cost of Merchandise Sold* n Gross Profit n n * For Periodic Inventory System see next slide
Income Statement: Cost of Merchandise Sold Periodic Inventory System n Cost of Merchandise Sold: u Beginning Merchandise Inventory u Plus: Cost of Merchandise Purchased: • Purchases • Less: Purchase Returns & Allowances • Less: Purchase Discounts • Net Purchases • Plus Transportation In F Cost of Merchandise Purchased u Merchandise Available for Sale u Less: Ending Merchandise Inventory u COST OF MERCHANDISE SOLD
- Inventory and warehousing cycle
- Periodic and perpetual inventory system
- Perpetual inventory system sales returns
- Fob shipping point accounting
- Lifo perpetual inventory method
- Merchandising income statement
- Walmart perpetual inventory system
- Suppose dave's discount merchandise inventory
- Perpetual income statement
- Merchandising operations
- Perpetual motion machine
- Perpetual project closure
- Formula of annuity
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