Accounting - Periodic Inventory System-cost of goods sold and inventory are adjusted at the end of a period Perpetual Inventory System-entries are

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Accounting 211 Thursday, January 28th, 1999 Announcements: 1 st exam is next Thursday, check syllabus for room assignment. If you have a conflict contact Mike Powell. There is a review session Tuesday in class and Wednesday night. For recitation next week, complete homework for Lecture notes: Format for Income Statement: Net Sales - Cost of Goods Sold = Gross Margin (Profit) - Operating Expenses - Income Tax Expense = Net Income *see page 184 for merchandiser vs. service organizations Example: Your company purchases $10,000 of merchandise (for resale) on credit, terms 2/10, N/30, invoice dated 8/11/98. (2/10: 2% discount if paid within 10 days, N/30: no discount, due within 30 days)
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8/11/98 Purcha ses 10,000 Accou nts Payabl e 10,000 (Purchases is a temporary account used to keep inventory)
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Unformatted text preview: Periodic Inventory System--cost of goods sold and inventory are adjusted at the end of a period. Perpetual Inventory System--entries are updated immediately. 8/14/98 Your company returns $500 of the merchandise acquired on 8/11/98. 8/14/98 Accou nts Payabl e 500 Purcha se Return s and Allowa nces 500 8/19/98 Balance due to supplier is paid. (It is within 10 days, so we get the discount.) 8/19/98 Accou nts Payabl e 9,500 Cash 9,310 Purcha se Discou nts 190 (9,500 x 2% = 190, we only discount what we keep) Calculation of Net Purchases: Purchases $10,000- Purchase R & A- 500- Purchase Discounts- 190 Net Purchases $9,310 The Supplier's Journal Entries: 8/11 Acco unts Recei vable 10,00 Sales 10,00 8/14 Sales Retur ns and Allo wanc es 500...
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This note was uploaded on 02/20/2008 for the course ACCTG 211 taught by Professor Johnston during the Spring '99 term at Pennsylvania State University, University Park.

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Accounting - Periodic Inventory System-cost of goods sold and inventory are adjusted at the end of a period Perpetual Inventory System-entries are

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