Chapter 5 Accounting for Merchandising Operations 高立翰

Transcription

1 Chapter 5 Accounting for Merchandising Operations 高立翰

2 Study Objectives 1. Identify the differences between service and merchandising companies. 2. Explain the recording of purchases under a perpetual inventory system. 3. Explain the recording of sales revenues under a perpetual inventory system. 4. Explain the steps in the accounting cycle for a merchandising company. 5. Prepare an income statement for a merchandiser. 6. Explain the computation and importance of gross profit. 會計學 ( 一 ) 2

3 Accounting for Merchandising Operations Merchandising Operations Recording Purchases of Merchandise Recording Sales of Merchandise Completing the Accounting Cycle Forms of Financial Statements Operating cycles Flow of costs perpetual and periodic inventory systems Freight costs Purchase returns and allowances Purchase discounts Summary of purchasing transactions Sales returns and allowances Sales discounts Adjusting entries Closing entries Summary of merchandising entries Income statement Classified statement of financial position 會計學 ( 一 ) 3

4 Merchandising Operations (1/6) Merchandising Companies ( 買賣業 ) Buy and Sell Goods Wholesaler Retailer Consumer The primary source of revenues is referred to as sales revenue or sales 會計學 ( 一 ) 4

5 Merchandising Operations (2/6) Income Measurement Sales Revenue Less NOT used in a Service business. Illustration 5-1 Cost of Goods Sold = Gross Profit Less Cost of goods sold ( 銷貨成本 ) is the total cost of merchandise sold during the period. Operating Expenses = Net Income (Loss) 會計學 ( 一 ) 5

6 Merchandising Operations (3/6) Operating Cycle The operating cycle of a merchandising company ordinarily is longer than that of a service company Illustration 5-2 會計學 ( 一 ) 6

7 Merchandising Operations (4/6) Flow of Costs Illustration 5-3 會計學 ( 一 ) 7

8 Merchandising Operations (5/6) Perpetual System ( 永續盤存制 ) 1. Purchases increase Merchandise Inventory. 2. Freight costs, Purchase Returns and Allowances and Purchase Discounts are included in Merchandise Inventory. 3. Cost of Goods Sold is increased and Merchandise Inventory is decreased for each sale. 4. Physical count done to verify Merchandise Inventory balance. The perpetual inventory system provides a continuous record of Merchandise Inventory and Cost of Goods Sold. 會計學 ( 一 ) 8

9 Merchandising Operations (6/6) Periodic System ( 定期盤存制 ) 1. Purchases of merchandise increase Purchases. 2. Ending Inventory determined by physical count. 3. Calculation of Cost of Goods Sold: Beginning inventory $ 100,000 Add: Purchases, net + 800,000 Goods available for sale 900,000 Less: Ending inventory - 125,000 Cost of goods sold $ 775,000 會計學 ( 一 ) 9

10 Recording Purchases of Merchandise (1/6) Made using cash or credit (on account) Normally recorded when goods are received Purchase invoice should support each credit purchase 會計學 ( 一 ) 10

11 Recording Purchases of Merchandise (2/6) Under the perpetual inventory system, companies record in the Merchandise Inventory account the purchase of goods they intend to sell. Illustration (pp. 204) From INVOICE NO. 731 (Illustration 5-5) record the journal entry Sauk Stereo would make to record its purchase from PW Audio Supply May 4 Merchandise inventory 3,800 Accounts payable 3,800 會計學 ( 一 ) 11

12 Recording Purchases of Merchandise (3/6) Freight Costs ( 運費 ) Terms of Sale ( 銷貨條件 ) Seller places goods Free On Board the carrier, and buyer pays freight costs. Seller places goods Free On Board to the buyer s place of business, and seller pays freight costs. Freight costs incurred by the seller are an operating expense. Illustrations (pp. 205) 會計學 ( 一 ) 12

13 Recording Purchases of Merchandise (4/6) Purchase Returns and Allowances ( 進貨退回與折讓 ) Purchaser may be dissatisfied because goods are damaged or defective, of inferior quality, or do not meet specifications Purchase Return Return goods for credit if the sale was made on credit, or for a cash refund if the purchase was for cash. Purchase Allowance May choose to keep the merchandise if the seller will grant an allowance (deduction) from the purchase price. Illustration (pp.206) 會計學 ( 一 ) 13

14 Recording Purchases of Merchandise (5/6) Purchase Discount ( 進貨折扣 ) Credit terms may permit buyer to claim a cash discount for prompt payment Advantages: Purchaser saves money Seller shortens the operating cycle Example: Credit terms of 2/10, n/30, is read two-ten, net thirty. 2% cash discount if payment is made within 10 days. 2/10, n/30 1/10 EOM n/10 EOM 2% discount if paid within 10 days, otherwise net amount due within 30 days. 1% discount if paid within first 10 days of next month. Net amount due within the first 10 days of the next month. Illustrations (pp.207) 會計學 ( 一 ) 14

15 Recording Purchases of Merchandise (6/6) Should discounts be taken when offered? Passing up the discount offered equates to paying an interest rate of 2% on the use of $3,500 for 20 days. Example: 2% for 20 days = Annual rate of 36.5% (365/20 = twenty-day periods x 2% = 36.5%) 會計學 ( 一 ) 15

16 Summary of Purchasing Merchandise Illustration Merchandise Inventory Debit Credit 4 th - Purchase 6 th Freight-in 3, th -Return th - Discount Balance 3,580 會計學 ( 一 ) 16

17 Recording Sales of Merchandise Made for cash or credit (on account). Illustration 5-5 Normally recorded when earned, usually when goods transfer from seller to buyer. Sales invoice should support each credit sale 會計學 ( 一 ) 17

18 Journal Entries for Recording a Sale #1 Cash or Accounts receivable Sales XXX XXX Selling Price #2 Cost of goods sold Merchandise inventory XXX XXX Cost Illustration: May 4 Assume PW Audio Supply records its May 4 sale of 3,800 to Sauk Stereo (Illustration 5-5) as follows. Assume the merchandise cost PW Audio Supply 2,400. Accounts receivable 3,800 Sales 3,800 4 Cost of goods sold 2,400 Merchandise inventory 2,400 會計學 ( 一 ) 18

19 Sales Returns and Allowances Flipside of purchase returns and allowances Contra-revenue account (debit) Sales not reduced (debited) because: would obscure importance of sales returns and allowances as a percentage of sales. could distort comparisons between total sales in different accounting periods. Illustrations: (p. 209) 會計學 ( 一 ) 19

20 Sales Discount Offered to customers to promote prompt payment. Flipside of purchase discount. Contra-revenue account (debit). Illustration: Assume Sauk Stereo pays the balance due of 3,500 (gross invoice price of 3,800 less purchase returns and allowances of 300) on May 14, the last day of the discount period. Prepare the journal entry PW Audio Supply makes to record the receipt on May 14. May 14 Cash 3,430 Sales discounts 70 * Accounts receivable 3,500 * [( 3, ) X 2%] 會計學 ( 一 ) 20

21 Completing the Accounting Cycle (1/2) Adjusting Entries ( 調整分錄 ) Generally the same as a service company. One additional adjustment to make the records agree with the actual inventory on hand. Involves adjusting Merchandise Inventory and Cost of Goods Sold. Illustration: Suppose that PW Audio Supply has an unadjusted balance of 40,500 in Merchandise Inventory. Through a physical count, PW Audio determines that its actual merchandise inventory at year-end is 40,000. The company would make an adjusting entry as follows. Cost of goods sold 500 Merchandise inventory 500 會計學 ( 一 ) 21

22 Completing the Accounting Cycle (2/2) Closing Entries ( 結帳分錄 ) 會計學 ( 一 ) 22

23 Forms of Income Statement (1/5) Income Statement Primary source for evaluating a company s performance. Format designed to differentiate between the various sources of income and expense. Income Statement: Presentation of Sales Illustration 5-13 會計學 ( 一 ) 23

24 Forms of Income Statement (2/5) Income Statement: Gross Profit Illustration 5-13 Illustration 5-10 會計學 ( 一 ) 24

25 Forms of Income Statement (3/5) Income Statement: Operating Expenses IFRS allows presentation by nature and presentation by function. 會計學 ( 一 ) 25

26 Forms of Income Statement (4/5) Other Income and Expense Various revenues and gains and expenses and losses that are unrelated to the company s main line of operations Interest Expense Interest expense, if material, must be disclosed on the face of the income statement 會計學 ( 一 ) 26

27 Forms of Income Statement (5/5) Comprehensive Income ( 綜合淨利 ) Includes certain adjustments to pension plan assets, gains and losses on foreign currency translation, and unrealized gains and losses on certain types of investments. Reported in a combined statement of net income and comprehensive income, or in a separate schedule that reports only comprehensive income 會計學 ( 一 ) 27

28 Forms of Statement of Financial Position Classified Statement of Financial Position Illustration 5-15 會計學 ( 一 ) 28

29 Appendix 5A: Periodic Inventory System Periodic System Separate accounts used to record purchases, freight costs, returns, and discounts. Company does not maintain a running account of changes in inventory. Ending inventory determined by physical count. Calculation of Cost of Goods Sold Illustration 5A-1 會計學 ( 一 ) 29

30 Appendix 5A: Purchases under Periodic System (1/2) Purchase Illustration: On the basis of the sales invoice (Illustration 5-5) and receipt of the merchandise ordered from PW Audio Supply, Sauk Stereo records the 3,800 purchase as follows. May 4 Purchases 3,800 Freight Costs Illustration: Accounts payable 3,800 If Sauk pays Acme Freight Company 150 for freight charges on its purchase from PW Audio Supply on May 6, the entry on Sauk s books is: May 6 Freight-in (Transportation-in) 150 Cash 150 會計學 ( 一 ) 30

31 Appendix 5A: Purchases under Periodic System (2/2) Purchase Returns and Allowances Illustration Sauk Stereo returns 300 of goods to PW Audio Supply and prepares the following entry to recognize the return. May 8 Accounts payable 300 Purchase returns and allowances 300 Purchase Discounts Illustration On May 14 Sauk Stereo pays the balance due on account to PW Audio Supply, taking the 2% cash discount allowed by PW Audio for payment within 10 days. Sauk Stereo records the payment and discount as follows May 14 Accounts payable 3,500 Purchase discounts 70 Cash 3,430 會計學 ( 一 ) 31

32 Appendix 5A: Sales under Periodic System (1/2) Sales Illustration PW Audio Supply, records the sale of 3,800 of merchandise to Sauk Stereo on May 4 (sales invoice No. 731, Illustration 5-5) as follows. May 4 Accounts receivable 3,800 Sales 3,800 No entry is recorded for cost of goods sold at the time of the sale under a periodic system. 會計學 ( 一 ) 32

33 Appendix 5A: Sales under Periodic System (2/2) Sales Returns and Allowances Illustration May 4 To record the returned goods received from Sauk Stereo on May 8, PW Audio Supply records the 300 sales return as follows. Sales returns and allowances 300 Accounts receivable 300 Sales Discounts Illustration May 14 On May 14, PW Audio Supply receives payment of 3,430 on account from Sauk Stereo. PW Audio honors the 2% cash discount and records the payment of Sauk s account receivable in full as follows. Cash 3,430 Sales discounts 70 Accounts receivable 3,500 會計學 ( 一 ) 33

34 Comparison of Entries-Perpetual vs. Periodic Illustration 5A-2 會計學 ( 一 ) 34

35 Appendix 5B: Worksheet for a Merchandising Company Illustration 5B-1 會計學 ( 一 ) 35