Chapter6-1

Chapter6-1 - Review of Short Review of Short-term...

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eview of Short rm Investment Review of Short-term Investment • There are three types of marketable securities – Trading securities, Available-for-sale securities, and Held- to-maturity securities • Trading securities – purchase, sell, and period-end adjustment 6-1
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xercise Exercise n Jan 1 st 2007 UPS acquired 500 common On Jan. 1 , 2007, UPS acquired 500 common shares of PepsiCo stock for $25/share. UPS tended to sell the stock for short rm profit intended to sell the stock for short-term profit. On January 31 st , 2007, PepsiCo is trading at 30/share On February 5 th UPS sold the $30/share. On February 5 , UPS sold the shares for $27/share. uestion: How would the investment affect Question: How would the investment affect UPS’ income statements and balance sheets r January and February of 2007? for January and February of 2007? 6-2
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HAPTER 6 CHAPTER 6 Reporting and Interpreting OGS & Inventory COGS & Inventory I. Understanding Inventory II. Four Inventory Costing Methods Specific Unit Cost Average Cost First-In, First-Out (FIFO) Cost 6-3 Last-In, First-Out (LIFO) Cost
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ross Profit Gross Profit • Sales Revenue minus Cost of Goods Sold lso called Gross Margin Also called Gross Margin • Represents markup on products • “Gross” because other expenses such as sales and marketing, research and development have not been deducted 6-4
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ventory Inventory • Items held by the company for re-sale – Current asset on the Balance Sheet • Items sold shifted to Cost of Goods Sold – Expense on the Income Statement • Sales revenue based on retail price of ventory inventory • Cost of Goods Sold based on cost of ventory 6-5 inventory
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n example An example On Sept. 1, 2008, OIC company had 2 units of telephones (each cost $10) on hand. In Sept., it purchased 10 more hones at a $10 each on account Record the purchase of phones at a $10 each on account. Record the purchase of the 10 telephone sets. Inventory $100 Accounts Payable $100 6-6
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xample continued uring September the company sold 9 telephone (which Example continued During September, the company sold 9 telephone (which were purchased at $10 each) at $20 each for cash. Record e sale of the telephone sets. the sale of the telephone sets. ash 180 Cash $180 Sales Revenue $180 Cost of Goods Sold $90 ventory 90 6-7 Inventory $90
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hat is the ending balance of Inventory? What is the ending balance of Inventory? Inventory ost of Goods BB 20 Cost of Goods Available r Sale 100 90 for Sale = 120 EB 30 6-8
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he Inventory T- count The Inventory T account Inventory Beginning Bal. Cost of Goods Available = $ of Purchase COGS for Sale Ending Bal. 6-9
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eginning Inv. + Purchase OGS = Ending Inv. From the last slide, we have: Beginning Inv. Purchase COGS Ending Inv. Cost of Goods vailable for Sale Available for Sale Note • Inventory is increased by purchases of additional ventory, and reduced by sales. inventory, and reduced by sales.
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This note was uploaded on 11/27/2011 for the course ACCY 2001-17 taught by Professor Xue during the Fall '11 term at GWU.

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Chapter6-1 - Review of Short Review of Short-term...

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