《principles of accounting》chap6PPT课件.pptx

Show how to account for inventory
Learning Objective
LO 1
SHOW HOW TO ACCOUNT FOR INVENTORY
Exhibit 6-1 | Contrasting a pany with a pany
Merchandisers have two accounts that service entities don’t need:
Cost of goods sold on the e statement
Inventory on the balance sheet
Exhibit 6-2 |
Inventory and Cost of Goods Sold When Inventory Cost Is Constant
SHOW HOW TO ACCOUNT FOR INVENTORY
Assume Family Dollar Stores, Inc., has in stock 300 towels that cost $3 each.
Family Dollar Stores marks each towel up by $2 and sells 200 of the towels for $5 each.
The cost of inventory sold shifts from asset to expense when the seller delivers goods to the buyer
SHOW HOW TO ACCOUNT FOR INVENTORY
LO 1
LO 1
Sale Price vs. Cost of Inventory
Note the difference
Sales revenue based on sales price of inventory sold
Cost of goods sold based on cost of inventory sold
Inventory based on cost of inventory on hand
LO 1
Perpetual
Inventory System
Periodic
Inventory System
Used for all types of goods
Keeps a running record of all goods bought, sold, and on hand
Inventory counted at least once a year
Used for inexpensive goods
Does not keep a running record of all goods bought, sold, and on hand
Inventory counted at least once a year
Accounting for Inventory in the Perpetual System
LO 1
Accounting for Inventory in the Perpetual System
How the Perpetual System Works
Optical scanner reads bar code, system
Records sale
Updates inventory records
Two entries needed for each sale
Record revenue and asset received
Record cost of goods sold and reduction of inventory
Exhibit 6-4 | Bar Code for Electronic Scanner