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lecture 6- Inventory - Lecture 6 Inventory and Click to...

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Click to edit Master subtitle style © Xiaohui Liu, 2010 Lecture 6 Inventory and Cost of Goods Sold 11
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© Xiaohui Liu, 2010 OBJECTIVES Understand perpetual and periodic inventory system Understand different inventory valuation method : FIFO/LIFO/WAVE 22
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© Xiaohui Liu, 2010 Merchandising co. Service co. vs. merchandising co. Service co. example) provides legal services Merchandising co example) sells t-shirts (inventory) This chapter is on inventory, thus we are talking about merchandising companies only. 33
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© Xiaohui Liu, 2010 Example 1 Example: Doc’s Computer store sells laptops for $1000 each. Doc bought these laptops at $800 each. On October 10th, Doc sold 2 laptops. This transaction is recorded in two parts: 1) sale of laptops 2) remove laptops from inventory 44 = L    + OE CASH 2,000 REVENUE 2,000 = L    + OE INVENTORY -1,600 COST OF GOODS SOLD -1,600
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© Xiaohui Liu, 2010 Example 2 Example: Doc also sells laptop cases. In Doc’s storage, there are 50 identical cases. 10 of them Doc bought at $20 each, the other 40 Doc paid $25 each. On October 10th, Doc sold 2 cases for $40 each. This transaction is recorded in two parts: 1) sale of laptop cases 2) remove laptop cases from inventory 55 = L    + OE CASH REVENUE 80 80 = L    + OE INVENTORY COGS 2 cases 2 cases $? $?
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© Xiaohui Liu, 2010 Example 3 Example: Doc put some light-up pens for sale at the check out counter. October 1st, in the pen holder, there are 100 pens.30 of them Doc bought at $1 each, the other 70 Doc bought at $1.05 each. These pens are sold for $1.5 each. October 31st, there are 32 pens left in the pen holder. 1) sale of the pens 66 $1.5 x (100-32) = 102 = L    + OE CASH REVENUE 102 = L    + OE INVENTORY COGS (100-32) pens 68 pens $? $?
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© Xiaohui Liu, 2010 Inventory Systems Inventory Systems: Perpetual Periodic Inventory Cost Flow Methods: Specific identification First-In First-Out Last-In First-Out Weighted Average 77
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© Xiaohui Liu, 2010 Inventory Systems:
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