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Kieso_Inter_13e_Ch08

Kieso_Inter_13e_Ch08 - CHAPTER 8 VALUATION OF INVENTORIES...

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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
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Chapter 8-2 Inventories are: items held for sale, or goods to beused in theproduction of goods to besold. Inventory Issues Inventory Issues Classification Merchandiser Merchandiser Manufacturer Manufacturer Businesses with Inventory: or
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Chapter 8-3 Oneinventory account Purchasegoods ready for sale Classification Inventory Issues Inventory Issues Illustration 8-1
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Chapter 8-4 Classification Inventory Issues Inventory Issues Illustration 8-1 Threeaccounts Raw materials Work in process Finished goods
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Chapter 8-5 Inventory Cost Flow Inventory Issues Inventory Issues Illustration 8-2 Illustration 8-2
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Chapter 8-6 Inventory Cost Flow Inventory Issues Inventory Issues Illustration 8-3 Companies use oneof two types of systems for maintaining inventory records perpetual system or periodic system .
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Chapter 8-7 Inventory Cost Flow Inventory Cost Flow Perpetual System 1. Purchases of merchandise are debited to Inventory. 2. Freight-in is debited to Inventory. Purchase returns and allowances and purchasediscounts are credited to Inventory. 3. Cost of goods sold is debited and Inventory is credited for each sale. 4. Subsidiary records show quantity and cost of each type of inventory on hand. Theperpetual inventory system provides a continuous record of Inventory and Cost of Goods Sold.
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Chapter 8-8 Inventory Cost Flow Inventory Cost Flow Periodic System 1. Purchases of merchandisearedebited to Purchases. 2. Ending Inventory determined by physical count. 3. Calculation of Cost of Goods Sold: Beginning inventory $ 100,000 Purchases, net 800,000 Goods availablefor sale
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Chapter 8-9 Inventory Cost Flow Inventory Cost Flow Illustration: FesmireCompany had thefollowing transactions during the current year. Record thesetransactions using thePerpetual and Periodic systems.
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Chapter 8-10 Inventory Cost Flow Inventory Cost Flow Illustration 8-4 Illustration: Solution on notes page
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Chapter 8-11 Inventory Cost Flow Inventory Cost Flow Illustration: Assumethat at theend of thereporting period, theperpetual inventory account reported an inventory balanceof $4,000. However, a physical count indicates inventory of $3,800 is actually on hand. Theentry to record the necessary write-down is as follows. Inventory Over and Short 200 Inventory 200 Note: Inventory Over and Short adjusts Cost of Goods Sold. In practice, companies sometimes report Inventory Over and Short in the“Other revenues and gains” or “Other expenses and losses” section of theincomestatement.
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Chapter 8-12 Inventory Control Inventory Issues Inventory Issues All companies need periodic verification of theinventory records by actual count, weight, or measurement, with thecounts compared with the detailed inventory records.
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