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CHAPTER%20O7%20POWER%20POINT%202009%20summer

CHAPTER%20O7%20POWER%20POINT%202009%20summer - CHAPTER7 1...

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1 CHAPTER 7 MERCHANDISING OPERATIONS
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2 Inventory MERCHANDISING COMPANY : COMPANY THAT BUYS A READY MADE PRODUCT AND  SELLS AT A HIGHER PRICE EXAMPLE; RETAIL STORES …WALMART, HMV,  WHOLESALERS …SELL TO RETAILERS SERVICE COMPANY : COMPANY THAT SELLS A SERVICE. EXAMLE:…. AOL, HAIRDRESSER, CABLE,
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3 Types of companies DIFFERENCES BETWEEN  MERCHANDISER AND SERVICE  COMPANY; 1-INCOME STATEMENT 2-ACCOUNTING FOR INVENTORY
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4 INCOME STATEMENTS SERVICE                      MERCHANDISER      REVENUE       SALES       -C. G.S. EXP.       GROSS PROFIT -EXPENSES              -OPERATING EXP. NET INCOME       NET INCOME
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5 EXAMPLE : journal entries COMPANY ABC BUYS 100 COMPUTERS AT $1000  EACH. DURING THE YEAR THE COMPANY SELLS 80  COMPUTERS AT $3000 /EACH. DR INVENTORY     $100,000 CR ACCOUNTS PAYABLE 100,000 DR ACCOUNTS RECEIVABLE 240,000 CR SALES 240,000 DR COST OF GOODS SOLD 80,000 CR INVENTORY 80,000
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6 Cost of goods sold SALES                    240,000 COST OF GDS SOLD         80,000 GROSS PROFIT      160,000 INVENTORY ON B/S $100,000 – 80,000 = 20,000   OR 20 COMPUTERS X $1000 = 20,000
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7 COST OF GOODS SOLD EXAMPLE ; 1000 UNITS OF $1.00 IN THE OPENING  INVENTORY. PURCHASED IN THE MONTH AN  ADDITIONAL 3000 UNITS FOR $1.00 EACH.  SOLD 2500 UNITS AT 3.00 (SELLING PRICE). END INVENTORY IS THEN 1500 UNITS.
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8 Calculating cost of goods sold OPEN INVENTORY 1000 X $1.00              = 1000 PURCHASES       3000 X 1.00 =                    3000  GOODS AVAILABLE FOR SALE                    4000 ENDING INVENTORY  1500 X 1.00 =           -1500 COST OF GOODS SOLD 2500 X 1.00 =         2500
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9 Cost of goods sold- format FORMAT: COST OF GOODS SOLD; OPENING INVENTORY $XX +PURCHASES   -XX GOODS AVAILABLE FOR SALE  XX -ENDING INVENTORY  -XX COST OF GOODS SOLD   XX  
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10 Income Statement format SALES       XX LESS:SALES DISCOUNTS       XX NET SALES                                            XX COST OF GOODS SOLD: OPEN INVENTORY                                XX PLUS COST OF PURCHASES;                                          PURCHASES                      XX LESS: PURCHASE DISCOUNT                -XX NET PURCHASES                                     XX ADD TRANSPORTATION-IN                    XX COST OF PURCHASES                   + XX LESS
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