3-15 - inventory • Shortage • Transfer Part I...

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Unit IV The Retail Method of Inventory
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Objectives Knowledge and understanding of the retail method of inventory Differentiation between physical inventory and book inventory Identification and recognition of procedures necessary to implement the retail method of inventory Calculation of book inventory figures at cos Identification and description of the forms used in the retail method of inventory
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Objectives Recognition and identification of the causes of overages and shortages Calculation of overages and shortages based on inventory figures Evaluation of the advantages and limitations of the retail method of inventory
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Key Terms Book inventory Charge-back to vendors Closing book inventory Closing physical stock Debit memo form Journal or purchase record Opening book inventory Overage Perpetual inventory Physical inventory Price change form Retail Method of Inventory Return to Vendor Running book
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Unformatted text preview: inventory • Shortage • Transfer Part I Explanation of the Retail Method of Inventory Part 1. Explanation of the Retail Method of Inventory • The retail method of inventory valuation involves: – Taking a physical inventory count to determine the total retail value of a particular department – Determining the cumulative markup percentage on the total merchandise handled – Deriving the cost value of the closing inventory from the retail by using cumulative markup percentage achieved on the total merchandise handled Part 1. Explanation of the Retail Method of Inventory • Book Inventory is a “statistical record” or book figure of the amount of merchandise that should be on hand at current retail (what you should have on hand) • Physical Inventory is a count taken at the current retail price of goods owned. It is a count that is actually done “by hand”...
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This note was uploaded on 02/14/2012 for the course HUEC 3043 taught by Professor Freeman during the Fall '10 term at LSU.

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3-15 - inventory • Shortage • Transfer Part I...

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