{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

chapter6 - CHAPTER 6 Inventories ACCT100 Autumn 2011 Teresa...

Info icon This preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 6-1 CHAPTER 6 Inventories ACCT100 Autumn 2011 Teresa Chu Chapter 6-2 Take physical inventory for 2 reasons: Perpetual System 1. Check accuracy of inventory records 2. Determine amount of inventory lost (wasted raw materials, shoplifting or employee theft) Periodic System 1. Determine inventory at balance sheet date 2. Determine COGS for the period Determining Inventory Quantities
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Chapter 6-3 2 steps: 1. Take a physical inventory Actually count, weigh or measure each kind of inventory on hand Take inventory when business is closed or slow 2. Determine ownership of goods INCLUDE: Goods in transits (FOB shipping point purchases and FOB destination sales), goods in warehouse and shops EXCLUDE: Consigned goods (goods of consignor and consignee sells them for a fee) Determining Inventory Quantities Chapter 6-4 Determining Inventory Quantities Merchandiser FOB shipping point purchases Merchandise inventory XX Cash XX Sale Supplier Customer Purchase FOB destination purchases NO Entry FOB destination sale Delivery expense XX Cash XX FOB shipping point sale NO Entry
Image of page 2
Chapter 6-5 Total Costs = Unit cost x Quantity ??? Cannot apply if identical goods are purchased at different prices (COGS differs depend on which units are sold) Specific identification method: Accurately identify which units are sold and remained 3 cost flow assumptions: Assume cost flow unrelated to physical flow (1) First-in, first-out (FIFO) (2) Last-in, first-out (LIFO) (3) Average cost Cost Flow Methods in Periodic System Chapter 6-6 Young & Crazy Company makes the following purchases: 1. 1 item on Feb 2 for $10 2. 1 item on Feb 15 for $15 3. 1 item on Feb 25 for $20 Young & Crazy Company sells one item on Feb 18 for $90. What would be the balance of ending inventory and cost of goods sold for the month ended February, assuming the company used the
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern