Accounting for Merchandising Operations

Accounting for
Merchandising Operations
Accounting in merchandising
company periodic inventory system
Incom statement
Accounting for revenue from sales
Accounting for revenue from sales in merchnadising company which
used the periodic inventory system is basically the same as that of a
merchandising company which used the perpetual inventory
system
Accounting for cost of goods sold
Accounting for perchases of merchandise
Accounting for purchases at the gross method
Accounting for purchases with
purchases discounts
Accounting for purchases at the net
method and control of purchases
discounts
Accounting for purchases returns and allowances
In periodic inventory system, it is credited purchases returns
and allowances account: this account is a contra account and is
accordingly đeucted from purchases in the income
statement
Freight in
Accounting for freight in in merchnadising company which used
the periodic inventory system is basically the same as that of a
merchandising company which used the perpetual inventory
syste
Accounting for merchandise inventory
cost of goods sold
Accounting for operating expenses
Accounting for operating expenses in merchnadising company
which used the periodic inventory system is basically the same as that
of a merchandising company which used the perpetual inventory
system
Income summary
End of the accounting period, income or loss is counted by
preparing the closing entries depend on whether using
income summary account
Prepare the work sheet under periodic
inventory system
The adjusting entry method
The closing entry method
Accounting in merchandising
company perpetual inventory system
Income statement
Accounting for revenues from sales
Gross sales
Sales returns and allowances
Sales discounts
Accounting for cost of goods sold
Net purchases and net cost of purchases
Accounting for purchases at the gross method
Accounting for purchases with
purchases discounts
Accounting for purchases at the net
method and control of purchases
discounts
Accounting for purchases returns and allowances
In perpetual inventory system: purchases returns and
allowances is decreased merchadise inventory and is
decreased account payable
Freight in
Freight in (transportation in) is customany forr the supplier
(seller) pay transportation costs or it is customany for the
purchases to pay transportation charges on merchandise
The supplier pays the freight charges but bills the buyer by
including them as a separate accounts item on the sales
invoice
Accounting for merchandise inventory
cost of goods sold
Accounting for operating expenses
Operating expenses is the third major of the
income statement for a merchandising
concern
include
selling expenses
general and administrative expenses
Income summary
End of the accounting period, income or loss is counted by
preparing the closing entries depend on whether using
income summary account
The work sheet for a merchandising concern
The work sheet of a merchandising business perpetual
inventory system is basically the same as that of a service
business
Except that it has to deal with the new accounts
Overview
Income statement for a merchandising
concern. It has three major parts
Revenue from sales
Cost of goods sold
Operating expenses
Operating cycle in merchandising company begins with
the purchase and to end with sales on credit or sales for
cash
Trade discounts
Sales discounts
Shipping terms
4