BMGT 220 Chapter 05

BMGT 220 Chapter 05 - Slide 5-1 Accounting for...

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Unformatted text preview: Slide 5-1 Accounting for Merchandising Operations Financial Accounting, Seventh Edition Chapter 5 Slide 5-2 Service organizations provide a service to earn revenue. Examples: movies, hospitals, universities, accounting firms, law firms. Revenues Expenses Minus Net income Equals Service Activities How has the NETFLIX business model changed over time? Slide 5-3 Merchandising Operations Merchandising Companies Buy and Sell Goods Wholesaler Retailer Consumer The primary source of revenues is referred to as sales revenue or sales . Slide 5-4 Merchandising Operations Income Measurement Not used in a Service business. Operating Income (Loss) Less Less Equal s Equal s Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Slide 5-5 ( A l l a m o u n t s i n m i l l i o n s o f d o l l a r s ) S a l e s R e v e n u e s 4 0 8 , 2 1 4 $ C o s t o f s a l e s ( 3 0 4 , 6 5 7 ) G r o s s p r o f i t 1 0 3 , 5 5 7 $ O p e r a t i n g e x p e n s e s ( 7 9 , 6 0 7 ) O p e r a t i n g i n c o m e 2 3 , 9 5 0 $ Reporting Income of Merchandising Company WAL-MART STORES, Inc. Consolidated Statement of Income For the year ended January 31, 2010 (all amounts in millions) Slide 5-6 F o r Y e a r E n d e d J a n u a r y 3 1 , 2 0 1 1 ( A l l a m o u n t s i n m i l l i o n s o f d o l l a r s ) S a l e s R e v e n u e s 5 0 , 2 7 2 $ C o s t o f s a l e s ( 3 7 , 6 3 5 ) G r o s s p r o f i t 1 2 , 6 3 7 $ O p e r a t i n g e x p e n s e s ( 1 0 , 3 2 5 ) U n u s u a l E x p e n s e ( 1 9 8 ) O p e r a t i n g i n c o m e 2 , 1 1 4 $ Reporting Income of Merchandising Company BEST BUY COMPANY, Inc. Consolidated Statement of Income For the year ended February 26, 2011 Slide 5-7 How Big is WAL-MART? 2 4 6 8 10 12 e Top 10 Retailers based on 2010 USA Retail Sales (expressed in millions of dollar Slide 5-8 Knowledge Check Question: In its income statement, a company reported operating expenses of $157,000. Determine sales and gross profit given cost of goods sold was $544,000 and operating loss was $41,000. 1. Sales: $660,000; Gross Profit: $503,000. 2. Sales: $742,000; Gross Profit: $198,000. 3. Sales: $742,000; Gross Profit: $585,000. 4. Sales: $660,000; Gross Profit: $116,000. Slide 5-9 Perpetual System 1. Purchases increase Merchandise Inventory. 2. Freight costs, Purchase Returns and Allowances and Purchase Discounts are included in Merchandise Inventory. 3. Cost of Goods Sold is increased and Merchandise Inventory is decreased for each sale....
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BMGT 220 Chapter 05 - Slide 5-1 Accounting for...

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