Chapter 5 - Chapter 5 Merchandising Company = buy and sell merchandise as their primary source of revenue o Retailers = merchandisers that purchase

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Chapter 5 Merchandising Company = buy and sell merchandise as their primary source of revenue o Retailers = merchandisers that purchase and sell directly to consumers o Wholesalers = merchandiser that sell to retailers o Revenues and Expenses Primary source of revenue is through sale of merchandise Sales Revenue or Sales Expenses are Cost of Goods Sold (total cost of merchandise sold during the period) and Operating Expenses o Net Income = Sales of Revenue – Cost of Goods = Gross Profit –Operating expenses = Net Income o Operating Cycle = longer than a service firm because of the purchase and sale of merchandise inventory o Two Systems of Inventory Perpetual System = detailed records of the cost of each inventory purchase and sale are maintained Cost of goods sold is determined each time a sale occurs Provides better inventory control Recording of Purchases o Purchases = recorded when the goods are received from the seller Recorded by a debit to merchandise inventory and a credit to cash or to accounts payable o Purchase Return = occurs when goods are returned to the seller
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This note was uploaded on 03/27/2008 for the course ACCT 100 taught by Professor Punke during the Spring '08 term at Wisconsin.

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Chapter 5 - Chapter 5 Merchandising Company = buy and sell merchandise as their primary source of revenue o Retailers = merchandisers that purchase

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