ACIS+3115+Ch08+Student+Fall+2010

ACIS+3115+Ch08+Student+Fall+2010 - Chapter 8-1 C H A P T E...

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Unformatted text preview: Chapter 8-1 C H A P T E R C H A P T E R 8 8 VALUATION OF INVENTORIES: VALUATION OF INVENTORIES: A COST-BASIS APPROACH A COST-BASIS APPROACH Intermediate Accounting 13th Edition Kieso, Weygandt, and Warfield Chapter 8-2 Inventories are: items held for sale, or goods to be used in the production of goods to be sold. Inventory Classification and Systems Inventory Classification and Systems LO 1 Identify major classifications of inventory. LO 1 Identify major classifications of inventory. Classification Merchandiser Merchandiser Manufacturer Manufacturer Businesses with Inventory: or Chapter 8-3 Type of Business Merchandiser Merchandiser One inventory account Purchase goods ready for sale Balance Sheet (in t housands) Current asset s Cash 285,000 $ Mar ket able secur it ies 530,000 Account s r eceivable 149,000 Mer chandise invent or y 777,000 Pr epaids 33,000 Tot al cur r ent asset s 1,774,000 I nvest ment s: I nvesment in ABC bonds 321,657 I nvest ment in UC I nc. 253,980 Not es r eceivable 150,000 Land held f or speculat ion 550,000 Sinking f und 225,000 Pension f und 653,798 Inventory Classification and Systems Inventory Classification and Systems LO 1 Identify major classifications of inventory. LO 1 Identify major classifications of inventory. Chapter 8-4 Type of Business Manufacturer Manufacturer Three accounts Raw materials Work in process Finished goods Balance Sheet (in t housands) Current asset s Cash 285,000 $ Mar ket able secur it ies 530,000 Account s r eceivable 149,000 I nvent or y Raw mat er ials 210,000 Wor k in pr ocess 417,000 Finished goods 150,000 Tot al invent or y 777,000 Pr epaids 33,000 Tot al cur r ent asset s 1,774,000 I nvest ment s: I nvesment in ABC bonds 321,657 Inventory Classification and Systems Inventory Classification and Systems LO 1 Identify major classifications of inventory. LO 1 Identify major classifications of inventory. Chapter 8-5 Two systems for maintaining inventory records: Inventory Classification and Systems Inventory Classification and Systems LO 2 Distinguish between perpetual and periodic inventory systems. LO 2 Distinguish between perpetual and periodic inventory systems. Control Perpetual system Periodic system Chapter 8-6 Features: Inventory Classification and Systems Inventory Classification and Systems LO 2 Distinguish between perpetual and periodic inventory systems. LO 2 Distinguish between perpetual and periodic inventory systems. Perpetual System 1. Purchases of merchandise are debited to Inventory. 2. Freight-in, purchase returns and allowances, and purchase discounts are recorded in Inventory. 3. Cost of goods sold is debited and Inventory is credited for each sale. 4. Physical count done to verify Inventory balance....
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