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Download ACCT 201 ACCT 201 ACCT 201 Reporting and Analyzing Merchandising Activities UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 4

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  • Reporting and Analyzing Merchandising ActivitiesUAA ACCT 201 Principles of Financial Accounting Dr. Fred BarbeeChapter4

  • Periodic Inventory MethodPurchasesAccts. PayableInventoryBI xxx xxx xxxWhen Inventory is PurchasedThe Inventory Account is not updated when inventory is purchased.

  • Perpetual Inventory MethodPurchasesAccts. PayPur. R&APur. Disc.Inventory xxx xxx xxx xxx xxxCOGSxxxxxxWhen PurchasedWhen Sold

  • Perpetual Inventory MethodSalesAccts. Rec.Inventory xxx xxxCOGSxxxxxxWhen Sale is madeMatch COGSSales R&A xxxSales Disc. xxx

  • Additional Merchandising Issues

  • Adjusting EntriesPrepaid ExpensesDepreciationUnearned RevenueAccrued ExpensesAccrued Revenue-Theres more!

  • Perpetual Systems Inventory ShrinkageShrinkage is defined as the loss of inventory.Usually charged to cost of goods sold.

  • Inventory Shrinkage Text ExampleSuppose that Z-Marts Inventory account at year-end 2002 has a balance of $21,250, but that a physical count reveals only $21,000 of inventory on hand.

  • Closing EntriesClose the Revenue AccountsClose the Expense AccountsClose the Income SummaryClose the Dividends AccountTheres more!

  • We have some new accountsClose these with the expense accounts.

  • Lets prepare theclosing entries forBobs Shop for Men.

  • Step 1: Close the Revenue Accounts to Income Summary.

  • Step 2: Close the Expense Accounts to Income Summary.

  • Step 2: Close Debit Balances in Temporary Accounts to Income Summary.

  • Step 3: Close Income Summary to Retained Earnings

  • Inventory Systems++Beginning inventoryNet cost of purchasesMerchandise available for saleEnding InventoryCost of Goods Sold

  • Merchandising Cost Accounts++Beginning inventory Year 1Net cost of purchases Merchandise available for saleEnding Inv. Year 1Cost of Goods Sold=Income Statement

  • Income Statement FormatsMultiple-Step

    Single-Step

  • Single-Step Income Statement

  • Multiple-Step Income Statement

  • Merchandising Cash FlowsExhibit 4-19Accrual-BasedCash-Based

  • Acid-Test RatioA common rule of thumb is the acid-test ratio should have a value of at least 1.0 to conclude a company is unlikely to face liquidity problems in the near future.

  • Gross Margin RatioPercentage of dollar sales available to cover expenses and provide a profit.

    Gross Margin Ratio=Net Sales Cost of Goods SoldNet Sales

    Chapter 4: Reporting and Analyzing Merchandising ActivitiesDr. Fred BarbeeChapter 4: Reporting and Analyzing Merchandising ActivitiesDr. Fred BarbeeChapter 4: Reporting and Analyzing Merchandising ActivitiesDr. Fred BarbeeChapter 4: Reporting and Analyzing Merchandising ActivitiesDr. Fred BarbeeChapter 4: Reporting and Analyzing Merchandising ActivitiesDr. Fred BarbeeChapter 4: Reporting and Analyzing Merchandising ActivitiesDr. Fred BarbeeChapter 4: Reporting and Analyzing Merchandising ActivitiesDr. Fred BarbeeChapter 4: Reporting and Analyzing Merchandising ActivitiesDr. Fred BarbeeChapter 4: Reporting and Analyzing Merchandising ActivitiesDr. Fred BarbeeChapter 4: Reporting and Analyzing Merchandising ActivitiesDr. Fred BarbeeChapter 4: Reporting and Analyzing Merchandising ActivitiesDr. Fred BarbeeChapter 4: Reporting and Analyzing Merchandising ActivitiesDr. Fred BarbeeChapter 4: Reporting and Analyzing Merchandising ActivitiesDr. Fred BarbeeChapter 4: Reporting and Analyzing Merchandising ActivitiesDr. Fred BarbeeChapter 4: Reporting and Analyzing Merchandising ActivitiesDr. Fred BarbeeChapter 4: Reporting and Analyzing Merchandising ActivitiesDr. Fred BarbeeChapter 4: Reporting and Analyzing Merchandising ActivitiesDr. Fred BarbeeChapter 4: Reporting and Analyzing Merchandising ActivitiesDr. Fred BarbeeChapter 4: Reporting and Analyzing Merchandising ActivitiesDr. Fred BarbeeChapter 4: Reporting and Analyzing Merchandising ActivitiesDr. Fred Barbee

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