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Accounting for Accounting for
Merchandising Businesses Merchandising Businesses
Service Business
Fees earned $XXX
Operating expenses –XXX
Net income $XXX
Nature of Businesses Nature of Businesses
Merchandising Business
Sales $XXX
Cost of Merchandise Sold –XXX
Gross Profit $XXX
Operating Expenses –XXX
Net Income $XXX
Nature of Businesses Nature of Businesses
Multiple-Step
Income
Statement
Revenue from sales:
Sales $720,185
Less:Sales returns and allowances $ 6,140
Sales discounts 5,790 11,930
Net sales $708,255
Cost of merchandise sold 525,305
Gross profit $182,950
NetSolutions
Income Statement For the Year Ended
December 31, 2007
Continued Continued
Operating expenses:
Selling expenses:
Sales salaries expense $56,230
Advertising expense 10,860
Depr. Expense–store equipment 3,100
Miscellaneous selling expense 630
Total selling expenses $ 70,820
Administrative expenses:
Office salaries expense $21,020
Rent expense 8,100
Depr. expense–office equipment 2,490
Insurance expense 1,910
Office supplies expense 610
Misc. administrative expense 760
Total admin. expenses 34,890
Total operating expenses 105,710
Income from operations $ 77,240
Continued Continued
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Other income and expenses:
Rent revenue $ 600
Interest expense (2,440) (1,840)
Net income $75,400
Concluded Concluded
Metode Metode Akuntansi Akuntansi Periodik Periodik vs. vs.
Perpetual Perpetual
Metode Periodik
• Suatu metode untuk menentukan harga pokok
barang yang dijual dan nilai persediaan barang
dagangan.
• Dalam metode ini, catatan persediaan tidak
menunjukkan nilai barang dagangan yang tersedia
untuk dijual dan nilai barang dagangan yang
terjual selama periode tersebut.
• Dalam metode ini, setiap pembelian dan
penjualan barang dagangan dicatat dalam akun
Persediaan dan akun Harga Pokok Penjualan.
• Nilai barang dagangan tersedia untuk dijual dan
nilai barang dagangan yang dijual secara kontinu
disajikan di catatan persediaan.
Metode Metode Akuntansi Akuntansi Periodik Periodik vs. vs.
Perpetual Perpetual
Metode Perpetual
Cost of Merchandise Purchased Cost of Merchandise Purchased
Purchases $521,980
Less: Purchase returns and
allowances $9,100
Purchase discounts 2,525 11,625
Net purchases $510,355
Add transportation-in 17,400
Cost of merchandise purchased $527,755
Cost of Merchandise Sold Cost of Merchandise Sold
Merchandise inventory, 1/1/07 $ 59,700
Purchases $521,980
Less: Purchase returns and
allowances $9,100
Purchase discounts 2,525 11,625
Net purchases $510,355
Add transportation-in 17,400
Cost of merchandise purchased 527,755
Merchandise available for sale $587,455
Less merchandise inventory, 12/31/07 62,150
Cost of merchandise sold $525,305
Single-Step Income
Statement for a
Merchandising
Business
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Revenues:
Net sales $708,255
Rent revenue 600
Total revenues $708,855
Expenses:
Cost of merchandise sold $525,305
Selling expenses 70,820
Administrative expenses 34,890
Interest expense 2,440
Total expenses 633,455
Net income $ 75,400
NetSolutions
Income Statement
For the Year Ended December 31, 2007
Statement of
Owner’s Equity for
a Merchandising
Business
Chris Clark, capital, 1/1/07 $153,800
Net income for year $75,400
Less withdrawals 18,000
Increase in owner’s equity 57,400
Chris Clark, capital, 12/31/07 $211,200
NetSolutions
Statement of Owner’s Equity
For the Year Ended December 31, 2007
Balance Sheet
Assets
Current assets:
Cash $52,950
Accounts receivable 91,080
Merchandise inventory 62,150
Office supplies 480
Prepaid insurance 2,650
Total current assets $209,310
NetSolutions
Balance Sheet
December 31, 2007
Continued Continued
Property, plant, and equipment:
Land $20,000
Store equipment $27,100
Less accumulated
depreciation 5,700 21,400
Office equipment $15,570
Less accumulated
depreciation 4,720 10,850
Total property, plant, and
equipment 52,250
Total assets $261,560
Continued Continued
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Liabilities
Current liabilities:
Accounts payable $22,420
Note payable (current portion) 5,000
Salaries payable 1,140
Unearned rent 1,800
Total current liabilities $ 30,360
Long-term liabilities:
Note payable (due 2017) 20,000
Total liabilities $ 50,360
Owner’s Equity
Chris Clark, capital 211,200
Total liabilities and owner’s equity $261,560
Concluded Concluded
Sales Transactions Sales Transactions
JOURNAL
Date Description
Post.
Ref. Dr Cr.
1
2
3
4
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Jan. 3 Cash 1 800 00
2007
Sales 1 800 00
To record cash sales.
On January 3, a firm sold $1,800 On January 3, a firm sold $1,800
of merchandise for cash. of merchandise for cash.
Cash Sales Cash Sales Cash Sales Cash Sales
Using a perpetual inventory, the inventory Using a perpetual inventory, the inventory
cost of $1,200 must be recorded. cost of $1,200 must be recorded.
6
7
8
9
3 Cost of Merchandise Sold 1 200 00
Merchandise Inventory 1 200 00
To record the cost of
merchandise sold.
10
Credit card sales (MasterCard or Credit card sales (MasterCard or
Visa) are recorded as cash sales. Visa) are recorded as cash sales.
At the end of the month, $48 was At the end of the month, $48 was
sent to cover this service charge. sent to cover this service charge.
JOURNAL
Date Description
Post.
Ref. Dr Cr.
1
2
3
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Cash 48 00
Jan. 31 Credit Card Expense 48 00
2007
Cash Sales Cash Sales
To record service charges
on credit card sales for the
month.
Jan. 12 Accounts Receivable—Sims Co. 510 00
Invoice No. 7172.
Sales 510 00
12 Cost of Merchandise Sold 280 00
Merchandise Inventory 280 00
Cost of merchandise sold
on Invoice No. 7172.
Sales on Account Sales on Account
On January 12, a firm sold Sims Company On January 12, a firm sold Sims Company
merchandise on account, $510. The cost of merchandise on account, $510. The cost of
the merchandise to the seller was $280. the merchandise to the seller was $280.
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Sales Discounts Sales Discounts
The terms for when payments for
merchandise are to be made are
called credit terms.
If buyer is allowed an
amount of time to pay, it is
known as the credit period.
If invoice is
paid within
10 days of
invoice date
Sales Discounts Sales Discounts
Credit Terms
Invoice for
$1,500
Terms:
2/10, n/30
$1,470 paid (less
2% as a cash
discount)
If invoice is
NOT paid
within 10
days of
invoice date
Sales Discounts Sales Discounts
Credit Terms
Invoice for
$1,500
Terms:
2/10, n/30
$1,500 PAID
Sales Discounts Sales Discounts
On January 21, the firm receives the On January 21, the firm receives the
amount due from Sims (refer to Slide amount due from Sims (refer to Slide
25), less the 2 percent discount. 25), less the 2 percent discount.
Jan. 21 Cash 499 80
Accounts Receivable—Sims Co. 510 00
Sales Discounts 10 20
Collection of Invoice
No. 7172, less discount.
Sales Returns and Allowances Sales Returns and Allowances
Merchandise that is returned to the
vendor is referred to as a sales return.
If there is a defect in the product or the
wrong item was shipped, the seller
may reduce the initial price at which
the goods were sold. This is known as
a sales allowance.
Jan. 13 Sales Returns and Allowances 225 00
Credit Memo No. 32.
Accounts Receivable—Krier Co. 225 00
13 Merchandise Inventory 140 00
Cost of Merchandise Sold 140 00
Cost of merchandise
returned—Credit Memo 32.
Sales Returns and Allowances Sales Returns and Allowances
On January 13, issued Credit Memo 32 to On January 13, issued Credit Memo 32 to Krier Krier
Company for merchandise returned to Company for merchandise returned to NetSolutions NetSolutions. .
Selling price, $225; cost to Selling price, $225; cost to NetSolutions NetSolutions, $140. , $140.
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Purchase Purchase
Transactions Transactions
Date Description
Post.
Ref. Dr Cr.
1
2
3
4
5
Jan. 3 Merchandise Inventory 2 510 00
2007
Cash 2 510 00
Purchased inventory from
Bowen Co.
Purchase Transactions
On January 13, Purchased merchandise On January 13, Purchased merchandise
for cash from Alden Company, $2,510. for cash from Alden Company, $2,510.
What’s the last
day the invoice
can be paid?
Purchase Discounts Purchase Discounts
Alpha Technologies
issues an invoice for
$3,000 to
NetSolutions dated
March 12, with terms
2/10, n/30.
Invoice period 30
Days in March 31
Date of invoice 12
Remaining days 19
April 11
Let’s do a simple
calculation.
The full amount is
due on April 11.
Purchase Discounts Purchase Discounts
We can borrow at an annual interest rate of
6%. Should we borrow the to pay the
invoice within the discount period?
Purchase Discounts Purchase Discounts
$60 discount
(2% x
$3,000)?
Discount $60.00
Interest for 20 days
at the rate of 6%
on $2,940 –9.80
Savings from
borrowing $50.20
Let’s see… Interest on the
amount due of $3,000 less
the 2 percent…
Purchase Discounts Purchase Discounts
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Looks like we should take
advantage of the discount even if we
have to borrow the money.
Purchase Discounts Purchase Discounts
Discount $60.00
Interest for 20 days
at the rate of 6%
on $2,940 –9.80
Savings from
borrowing $50.20
JOURNAL
Date Description
Post.
Ref. Dr Cr.
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2
3
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On March 12, On March 12, NetSolutions NetSolutions purchased purchased
merchandise on account from Alpha merchandise on account from Alpha
Technologies, $3,000. Technologies, $3,000.
Mar. 12 Merchandise Inventory 3 000 00
2007
Accounts Payable—Alpha
Technologies 3 000 00
Purchase Discounts Purchase Discounts
JOURNAL
Date Description
Post.
Ref. Dr Cr.
1
2
3
4
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If payment is made by March 22 If payment is made by March 22 NetSolutions NetSolutions
records the discount as a reduction in cost. records the discount as a reduction in cost.
Mar. 22 Accounts Payable—Alpha Technol. 3 000 00
Cash 2 940 00
Merchandise Inventory 60 00
2007
Purchase Discounts Purchase Discounts
JOURNAL
Date Description
Post.
Ref. Dr Cr.
1
2
3
4
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If If NetSolutions NetSolutions does not pay the invoice until does not pay the invoice until
April 11, it would pay the full amount. April 11, it would pay the full amount.
Apr. 11 Accounts Payable—Alpha Technol. 3 000 00
Cash 3 000 00
2007
Purchase Discounts Purchase Discounts
Purchases Returns and Allowances Purchases Returns and Allowances
A purchases return involves actually
returning merchandise that is
damaged or does not meet the
specifications of the order.
When the defective or incorrect
merchandise is kept by the buyer and
the vendor makes a price adjustment,
this is a purchases allowance.
NetSolutions received the NetSolutions received the
delivery from Maxim delivery from Maxim
Systems and determined that Systems and determined that
$900 of the items were not $900 of the items were not
the merchandise ordered. the merchandise ordered.
Debit Debit memorandum memorandum #18 is #18 is
issued to Maxim Systems. issued to Maxim Systems.
Purchases Returns and Allowances Purchases Returns and Allowances
You sent me the wrong interface cards.
We’ll send a debit memorandum with the
returned items.
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Mar. 7 Accounts Payable—Maxim Systems 900 00
Debit Memo No. 18
Merchandise Inventory 900 00
Purchases Returns and Allowances Purchases Returns and Allowances Purchases Returns and Allowances Purchases Returns and Allowances
On May 2, NetSolutions purchased $5,000
of merchandise from Delta Data Link,
subject to terms 2/10, n/30.
May 2 Merchandise Inventory 5 000 00
Purchased merchandise.
Accounts Payable—Delta Data 5 000 00
Purchases Returns and Allowances Purchases Returns and Allowances
On May 4, NetSolutions returns
$3,000 of the merchandise.
May 4 Accounts Payable—Delta Data Links 3 000 00
Returned portion of
merchandise purchased.
Merchandise Inventory 3 000 00
Purchases Returns and Allowances Purchases Returns and Allowances
On May 12, NetSolutions pays the amount due.
May 12 Accounts Payable—Delta Data Links 2 000 00
Paid invoice.
Cash 1 960 00
Merchandise Inventory 40 00
($5,000 ($5,000 ––
$3,000) x $3,000) x
2% 2%
Transportation Transportation
Costs Costs
FOB Shipping Point FOB Shipping Point
Buyer pays freight costs and debits
Merchandise Inventory
Fruit Express
Title passes to buyer as
shipment leaves
shipping point.
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June 10 Merchandise Inventory 900 00
Purchased merchandise, terms
FOB shipping point.
Accounts Payable—Magna Data 900 00
10 Merchandise Inventory 50 00
Cash 50 00
Paid shipping cost .
On June 10, On June 10, NetSolutions NetSolutions buys merchandise from buys merchandise from
Magna Data on account, $900, terms FOB shipping Magna Data on account, $900, terms FOB shipping
point and pays the transportation cost of $50. point and pays the transportation cost of $50.
FOB Shipping Point FOB Shipping Point FOB Destination FOB Destination
Title passes to buyer
upon arrival at
destination.
Seller pays freight costs and debits
Transportation Out
Fruit Express
On June 15, On June 15, NetSolutions NetSolutions sells merchandise to sells merchandise to Kranz Kranz
Company on account, $700, terms FOB destination. Company on account, $700, terms FOB destination.
The cost of the merchandise sold is $480. The cost of the merchandise sold is $480.
NetSolutions NetSolutions pays the transportation cost of $40. pays the transportation cost of $40.
FOB Destination FOB Destination
June 15 Accounts Receivable—Kranz Co. 700 00
Sold merchandise, terms FOB
destination.
Sales 700 00
15 Cost of Merchandise Sold 480 00
Merchandise Inventory 480 00
Cost of sale of Kranz Co .
FOB Destination FOB Destination
June 15 Transportation Out 40 00
Cash 40 00
Paid shipping cost on
merchandise sold.
On June 15, On June 15, NetSolutions NetSolutions sells merchandise to sells merchandise to Kranz Kranz
Company on account, $700, terms FOB destination. Company on account, $700, terms FOB destination.
The cost of the merchandise sold is $480. The cost of the merchandise sold is $480.
NetSolutions NetSolutions pays the transportation cost of $40. pays the transportation cost of $40.
Sales Taxes Sales Taxes
On August 12, merchandise is sold on On August 12, merchandise is sold on
account to Lemon Company, $100. The account to Lemon Company, $100. The
state has a 6% sales tax. state has a 6% sales tax.
Aug. 12 Accounts Receivable—Lemon Co. 106 00
Sales 100 00
Sales Taxes Payable 6 00
Invoice No. 339
Sales Taxes Sales Taxes
On September 15, the seller sends in a On September 15, the seller sends in a
payment of $2,900 to the taxing unit for payment of $2,900 to the taxing unit for
the August taxes collected. the August taxes collected.
Sept.15 Sales Tax Payable 2 900 00
Cash 2 900 00
Payment for sales taxes
collected during August.
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Balance Sheet Accounts
200 Liabilities
210 Accounts Payable
211 Salaries Payable
212 Unearned Rent
215 Notes Payable
300 Owner’s Equity
310 Chris Clark, Capital
311 Chris Clark, Drawing
312 Income Summary
100 Assets
110 Cash
112 Accounts Receivable
115 Merchandise Inventory
116 Office Supplies
117 Prepaid Insurance
120 Land
123 Store Equipment
124 Accumulated Depreciation—
Store Equipment
125 Office Equipment
126 Accumulated Depreciation—
Office Equipment
NetSolutions
Chart of Accounts
Income Statement Accounts
600 Other Income
610 Rent Revenue
700 Other Expense
710 Interest Expense
400 Revenues
410 Sales
411 Sales Returns and
Allowances
412 Sales Discounts
500 Costs and Expenses
510 Cost of Merchandise Sold
520 Sales Salaries Expense
521 Advertising Expense
522 Depreciation Expense—
Store Equipment
523 Transportation Out
529 Miscellaneous Selling Expense
530 Office Salaries Expense
531 Rent Expense
532 Depreciation Expense—
Office Equipment
533 Insurance Expense
534 Office Supplies Expense
539 Miscellaneous Admin. Expense
NetSolutions
Chart of Accounts
The following selected transactions were completed
by Cruise Co., during July of current of the year :
• 2 Juli: Purchased merchandise from Nadezh Co.
$9,000, term FOB Shipping point, 2/10, n/eom.
Prepaid transportation cost of $200 were added to
the invoice.
• 3 Juli :Sold merchandise for $ 11,000, plus 5% sales
tax to cash customers. The cost of merchandise
sold was $ 9,500.
• 4 Juli : Sold merchandise on account to Hogwart
Co. $ 30,000, term FOB Destination 1/10 , n/30. The
cost of merchandise sold was $ 25,500.
• 5 Juli :Sold merchandise to customer who used
American Express Card, $20,100. The cost of
merchandise sold was $18,000.
• 10 Juli : Issued credit memorandum for $7,500 to
Hogwart Co. for merchandise returned from sale on
July 4. The cost of merchandise sold was $ $7,000.
• 11 Juli : Sold merchandise for on account to
Dumbledore Co. $ 9,600, term FOB shipping point, 2/10,
n/eom. Added $150 to the invoice for transportation cost
prepaid. The cost of merchandise sold was $7,000.
• 12 Juli : Received check for amount due from Hogwart
Co. for sale on July 4
• 13 juli : Received check from American Express for non
bank credit card on July 5,
• 17 Juli :Paid Nadezh Co. for invoice of July 2.
• 24 Juli : Received on account from sale of July 11 to
Dumbledore Co.
• 27Juli : Paid First Bank $900 for service fees for
handling Master Card sales during July
The End The End