chp 6 - CHAPTER SIX Inventory Amazon.com 12/31 03 reports...

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1 CHAPTER SIX Inventory Goods held for resale Raw Materials $320,300,000 Work In Process 81,900,000 Finished Goods 185,300,000 Amazon.com 12/31/ 03 reports inventory of $293,297,000 Anheuser-Busch Merchandiser Manufacturer 12/31/ 03 reports inventory that consists of COST includes: Purchase Price Transportation Import duties ETC. Inventory is recorded at COST:
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2 ETC = Expenditures necessary to get the inventory to a point where it can be sold. Recording Inventory Selecting A System • Perpetual • Periodic The Inventory account: An entry is made directly to the account for: Purchases Purchase returns and allowances Purchase discounts Sales Sales returns and allowances The Cost of Goods Sold account: An entry is made directly to the account for: Sales Sales returns and allowances Perpetual Inventory System Inventory and cost of goods sold accounts are continually updated as transactions that impact them occur.
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3 At the end of the accounting period, a physical count of inventory is taken to determine goods on hand. If a physical count shows less, a loss would be recognized with a debit to Loss on Inventory Shrinkage and a credit to Inventory.In this case there were 3 mixers in ending inventory at the end of January. Perpetual Inventory System Creative Cookies Incs’ General Ledger Merchandise Inventory Cost of Goods Sold Beg. Bal 0 545 1,635 1,635 2,725 2,625 Beg. Bal 0 100 2,100 1,635 80 1,090 1,090 In journalizing the merchandise transactions in CCC5, we used a perpetual inventory system. If a periodic system had been used, the merchandise transactions would have been journalized as follows 1/4 To record the purchase of merchandise Purchases 2,625 Accounts payable 2,625 1/6 To record the freight charges Freight In 100 Cash 100 1/7 To record the return of merchandise Accounts payable 545 Freight in 20 Purchase returns 525 1/12 To record the sale of 3 mixers Accounts receivable 3,150 Sales 3,150 Cost goods sold and the decrease in inventory is not recorded. Freight out 75 Cash 75
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4 1/14 To record the purchase of merchandise Purchases 2,100 Accounts payable 2,100 1/18 To record the freight charges Freight In 80 Cash 80 1/20 To record the sale of 2 mixers for cash Cash 2,100 Sales 2,100 Cost goods sold and the decrease in inventory is not recorded. Periodic Inventory System Merchandise Inventory Cost of Goods Sold Beg. Bal 0 Purchases Purchase returns. .. 0 0
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This note was uploaded on 04/02/2008 for the course ACT 205 taught by Professor Middlemist during the Spring '08 term at Colorado State.

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chp 6 - CHAPTER SIX Inventory Amazon.com 12/31 03 reports...

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