C1 Chapter 06

C1 Chapter 06 - 6-1Chapter 6 Inventories and Cost of Goods...

Info iconThis preview shows pages 1–13. Sign up to view the full content.

View Full Document Right Arrow Icon

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

View Full DocumentRight Arrow Icon

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

View Full DocumentRight Arrow Icon

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

View Full DocumentRight Arrow Icon

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

View Full DocumentRight Arrow Icon

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

View Full DocumentRight Arrow Icon

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

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 6-1Chapter 6 Inventories and Cost of Goods SoldFinancial Accounting 1stCanadian ed. by PNCS-B6-2Inventory Systems - Periodic◆Reduces record-keeping but also decreases ability to track theft, breakage, etc. and prepare interim financial statementsInventory records are updated periodicallyInventory is based on physical inventory countsCGS = Inventory (B) + Purchase – Inventory (E)6-3Inventory Systems - Perpetual◆Point of sale terminals have improved ability of mass merchandisers to maintain perpetual systemsInventory records are updated after each purchase or saleInventory and CGS account balances are up to date6-4Cost of Goods Purchased◆Includes invoice price:Less:Purchase returns and allowancesPurchase discountsPlus:Transportation-in 6-5Comparison of Periodic and Perpetual Inventory SystemsPeriodic:Perpetual:Purchased on account 500 units at $8 each.Purchases4,000Accounts Payable4,000Inventory4,000Accounts Payable4,0006-6Comparison of Periodic and Perpetual Inventory SystemsPeriodic:Perpetual:Returned for credit 100 units damaged in transit.Accounts Payable800Purchase Returns & Allowances800Accounts Payable800Inventory8006-7Comparison of Periodic and Perpetual Inventory SystemsPeriodic:Perpetual:Sold on account 200 units at $10 each.Accounts Receivable2,000Sales Revenue2,000Accounts Receivable2,000Sales Revenue2,000Cost of Goods Sold1,600Inventory1,6006-8Shipping Terms◆When does the title of inventory change hands?◆Who is responsible for inventory while in transit?SellerBuyer6-9CIF Destination Point◆No sale or purchase until inventory reaches its destination◆Seller responsible for inventory while in transitSellerBuyerTitlePasses atDestination6-10FOB Shipping Point◆Both sale and purchase recorded upon shipment◆Buyer responsible for inventory while in transitSellerBuyerTitlePasses whenShipped6-11Inventory costs include◆Any freight costs incurred by buyer◆Cost of insurance for inventory in transit◆Cost of storing inventory before selling◆Duty taxes6-12Inventory Valuation and Income MeasurementValue Assigned toInventory on BalanceSheetValueExpensedas Cost of Goods Soldon IncomeStatementWhen Sold =6-13...
View Full Document

This note was uploaded on 10/19/2011 for the course ACCT 2242 taught by Professor Cumming during the Spring '11 term at Dalhousie.

Page1 / 40

C1 Chapter 06 - 6-1Chapter 6 Inventories and Cost of Goods...

This preview shows document pages 1 - 13. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online