Chap06-Merchandising Activities.pptVIP

Operating Cycle of a Merchandising Company Comparing Merchandising Activities with Manufacturing Activities Retailers and Wholesalers Income Statement of a Merchandising Company Accounting Systems Requirements for Merchandising Companies Accounting Systems Requirements for Merchandising Companies Two Approaches Used in Accounting for Merchandise Transactions Convert an asset to an expense Perpetual Inventory Systems Perpetual Inventory Systems On September 5, Worley Co. purchased 100 laser lights for resale for $30 per unit from Electronic City on account. Perpetual Inventory Systems On September 10, Worley Co. sold 10 laser lights for $50 per unit on account to ABC Radios. Perpetual Inventory Systems On September 15, Worley Co. paid Electronic City $3,000 for the September 5 purchase. Perpetual Inventory Systems On September 22, Worley Co. received $500 from ABC Radios as payment in full for their purchase on September 10. Taking a Physical Inventory Taking a Physical Inventory Closing Entries in a Perpetual Inventory System Credit Terms and Cash Discounts Credit Terms and Cash Discounts Recording Purchases at Gross Invoice Price Recording Purchases at Gross Invoice Price Recording Purchases at Gross Invoice Price On July 15, Play Clothes pays the full amount due to Kid’s Clothes. Prepare the journal entry for Play Clothes. Recording Purchases at Gross Invoice Price Now, assume that Play Clothes waited until July 20 to pay the full amount due to Kid’s Clothes. Prepare the journal entry for Play Clothes. Transportation Costs on Purchases Transactions Relating to Sales Sales On July 6, Kid’s Clothes sold $4,000 of merchandise to Play Clothes on credit with terms of 2/10, n/30. The merchandise originally cost Kid’s Clothes $2,000. Because Kid’s Clothes uses a perpetual inventory system, they must make two entries. Sales On July 6, Kid’s Clothes sold $4,000 of merchandise to Play Clothes on credit with terms of 2/10, n/30. The merchandise originally cost Kid’s