{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

LectureChapterSixPart2.pdf

LectureChapterSixPart2.pdf - Chapter 6 Accounting for...

Info icon This preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
7/7/2010 1 Chapter 6 Accounting for Merchandising Business Part II of III
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
7/7/2010 2 Chart of Accounts Perpetual Inventory System checkbld A list of all the accounts to be used by a specific business. checkbld All the accounts are numbered in sequence , beginning with the assets (resources) of the business checkbld Creating the Chart of Accounts is very important because the accounting system can only accumulate information within the framework of its existing accounts.
Image of page 2
7/7/2010 3 Perpetual Inventory System Journalizing the Operating Cycle checkbld Under the perpetual inventory system, the cost of merchandise inventory purchased is placed in the merchandisee inventory account and includes all reasonable and necessary costs to get the inventory ready for sale. Account Title Ref. Debit Credit April 5 Merchandise Inventory 25,000 Accounts Payable 25,000 (purchased inventory on account) Date General Journal Purchase of inventory (goods) on account checkbld Remember the next step in the accounting cycle is to post to the general ledgers (T-Accounts). checkbld On April 5 th , Martinez Company purchased merchandise from Bryant Company for $25,000 terms 2/10, n/30 (2% discount in paid within 10 days otherwise the net amount is due in 30 days) FOB Shipping Point.
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
7/7/2010 4 Perpetual Inventory System Journalizing the Operating Cycle checkbld Under the perpetual inventory system, the cost of shipping can either be debited to the merchandise inventory account or debited to Freight In . Account Title Ref. Debit Credit April 6 Merchandise Inventory 900 Cash 900 (paid for shipping costs) Date General Journal checkbld Freight In has the following characteristics: Owner’s Equity Expense Debit Normal Balance Temporary Included in Cost of Goods Sold on the Income Statement Paid for shipping costs – terms were FOB Shipping point checkbld On April 6 th , Martinez Company paid $900 of shipping costs.
Image of page 4
7/7/2010 5 Perpetual Inventory System Journalizing the Operating Cycle checkbld Under the perpetual inventory system, the returned merchandise inventory monetary value (not quantity) is removed from the merchandise inventory account and either cash is refunded or the account payable (obligation) is decreased for the amount of the return.
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern