Chp 8 Inventories(1)

Chp 8 Inventories(1) - Inventories Measurement Anthony Meder Ph.D October 25 Types of Inventory Wholesale or retail firms Goods in finished form

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Inventories: Measurement Anthony Meder, Ph.D. October 25 and 27, 2011
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Types of Inventory Wholesale or retail firms? Goods in finished form for resale. Manufacturing firms? Start with Raw materials Direct labor Manufacturing overhead Those flow into Work-in-process (items being manufactured)
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Manufacturing Inventories (illustration from the author provided slides) Raw Materials Work in Process Finished Goods Cost of Goods Sold Direct Labor Manufacturing Overhead $XX $XX $XX Raw materials purchased Direct labor incurred Manufacturing overhead incurred Raw materials used Direct labor applied Manufacturing overhead applied Work in process transferred to finished goods
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Perpetual Inventory System The one we have used to this point Tracks inventory and COGS as sales are made Allows firms to track inventory from acquisition to sale. If accurate, managers know at any given time how much inventory is on hand without a physical count
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Periodic Inventory System A physical count is needed at the end of the year to calculate COGS. During the year, merch. purchases go into a Purchases account Purchases 600 Accts. Payable 600 BEG INV + PURCHASES – COGS = END INV. BEG INV + PURCHASES – END INV =
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Obviously, items in possession of the firm are inventory Goods in transit F.O.B. shipping means once the seller ships, the buyer has legal title and responsibility F.O.B. destination means buyer doesn’t have title until mech arrives at the buyers firm
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This note was uploaded on 03/12/2012 for the course ACCT 211 taught by Professor Kamlet during the Spring '08 term at Binghamton University.

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Chp 8 Inventories(1) - Inventories Measurement Anthony Meder Ph.D October 25 Types of Inventory Wholesale or retail firms Goods in finished form

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