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Unformatted text preview: Types of Inventory Inventory – goods that are purchased or manufactured for resale in the normal course of business. 1. Merchandisers hold ___ ____________________ which consists of products acquired in a finished condition ready to sell without further processing. 2. Manufacturers generally hold three types of inventory. Each type represents a different stage in the manufacturing process: _____________________________ _____________________________ _____________________________ Our focus in ACCT 225 will be on merchandisers. ACCT 226 will focus on manufacturers. Goods on Consignment – Who Owns the Inventory ? Goods on consignment are not owned by the seller; the seller has physical possession of the goods, but the supplier (consignor) retains ownership and until the goods are sold. Goods in Transit – Who Owns the Inventory ? Chapter 7 Class Notes Reporting and Interpreting Inventories and Cost of Goods Sold Compiled by: Janice H. Fergusson, CPA Certain Materials used with permission of The McGraw-Hill Companies, Inc. ACCT 225 – Fall 2008 Page 2 of 9 Chapter 7 ________________________ – seller pays the shipping charges and owns the merchandise until it is delivered to the buyer. ________________________ – buyer pays the shipping charges and owns the merchandise during transit. Balance Sheet and Income Statement Reporting When inventory is purchased or manufactured – it is an _____ When inventory is sold – its cost becomes _______________ Relationship Between Inventory and Cost of Goods Sold Beginning Inventory $65,500 Beginning Inventory $65,500 $65,500 Purchases $387,800 Purchases $387,800 $387,800 Goods Available for Sale $453,300 $453,300 + + Ending Inventory...
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This note was uploaded on 06/06/2011 for the course ACCT 225 taught by Professor Canace during the Spring '08 term at South Carolina.
- Spring '08