Chapter 5 - Accounting for a merchandising business. This chapter presents the following content: Merchandising income statement, net sales, merchandise inventory systems, cost of goods sold: periodic, purchases,. | Merchandising Business Merchandising Income Statement Net Sales Cost of Goods Sold Gross Margin Operating Expenses Net Operating Margin Merchandising Income Statement Other Revenues and Expenses Net Income before Taxes Income Tax Expense Net Income Net Sales Sales Total or gross sales of merchandise Trade discounts Percentage reduction from list price Sales returns and allowances Reduction of price after sale Return of unacceptable merchandise Net Sales Sales Discounts Discount for payment within a stated period 2/10, n/30 2% discount if paid within 10 days Gross amount due in 30 days Net Sales Gross sales revenue Deduct: Sales returns and allowances Sales discounts Net sales revenues Merchandise Inventory Systems Periodic inventory system Determine cost of goods sold and inventory balance only at end of each accounting period Perpetual inventory system Determine cost of goods sold and inventory balance after each sale. Cost of Goods Sold: Periodic Merchandise inventory, beginning . | Merchandising Business Merchandising Income Statement Net Sales Cost of Goods Sold Gross Margin Operating Expenses Net Operating Margin Merchandising Income Statement Other Revenues and Expenses Net Income before Taxes Income Tax Expense Net Income Net Sales Sales Total or gross sales of merchandise Trade discounts Percentage reduction from list price Sales returns and allowances Reduction of price after sale Return of unacceptable merchandise Net Sales Sales Discounts Discount for payment within a stated period 2/10, n/30 2% discount if paid within 10 days Gross amount due in 30 days Net Sales Gross sales revenue Deduct: Sales returns and allowances Sales discounts Net sales revenues Merchandise Inventory Systems Periodic inventory system Determine cost of goods sold and inventory balance only at end of each accounting period Perpetual inventory system Determine cost of goods sold and inventory balance after each sale. Cost of Goods Sold: Periodic Merchandise inventory, beginning Purchases Transportation in Gross delivered cost of purchases Deduct: Purchases returns and allowances Purchases discounts Net cost of purchases Cost of goods available for sale Deduct: Merchandise inventory, ending Cost of goods sold Purchases Records the cost of all merchandise bought for resale Recorded at invoice cost Transportation In FOB shipping point Buyer is owner during transit and is responsible for transportation costs FOB destination Seller is owner during transit and is responsible for transportation costs Purchases Returns and Allowances Contra account to purchases Records Price concessions after purchase Returns of merchandise Purchases Discounts Contra account to purchases Records Cash discounts allowed for payments within discount period Net Cost of Purchases Purchases Transportation in Gross delivered cost of purchases Deduct: Purchases returns and allow Purchases discounts Net cost of purchases Merchandise Inventory Cost of merchandise on hand Amount determined by .
