Академический Документы
Профессиональный Документы
Культура Документы
Cash Cash
Accounts
Receivable Inventory
Inventory
Manufacturer Wholesaler
Retailer Customer
Channel of Distribution
4
CRUZ DELIVERY SERVICE SUPER BOOKSTORE
Service Revenue P30,000 Sales Revenue P54,000
Other Operating Income 3,000 Less Cost of Sales 30,000
Operating Expenses (12,000) Gross Income 24,000
Other Operating Expenses ( 2,000) Other Operating Income 5,000
Operating Expenses (16,000)
_______ Other Operating Expenses ( 2,000)
NET INCOME P19,000 NET INCOME P11,000
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Objective 1
6
Sale of Inventory
• Sales Revenue
– Amount earned from selling inventory
– Revenue account (Credit)
• Cost of Sales
– Cost of inventory that has been sold to
customers
– Expense account
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Sale of Inventory
• Sales Returns & Allowances
– When customer returns goods or the seller
grants a reduction in price to customer
– Contra-revenue account (debit balance)
• Sales Discounts
– If customer pays within the discount period
allowed by the seller
– Contra-revenue account (debit balance)
• Delivery Expense (Freight Out)
8
Sales Transactions
S5-5
GENERAL JOURNAL
DATE DESCRIPTION REF DEBIT CREDIT
9
Sales Transactions
S5-5
GENERAL JOURNAL
DATE DESCRIPTION REF DEBIT CREDIT
Cash 60,000
Accounts Receivable 60,000
Collected on account
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Sales Discounts
11
Sales Transactions
S5-5
GENERAL JOURNAL
DATE DESCRIPTION REF DEBIT CREDIT
Cash 58,800
Sales Discount 1,200
Accounts Receivable 60,000
Collected on account
12
Sales Transactions
S5-5
Sales $60,000
Sales Discount(1,200)
Net Sales $58,800
13
S5-6
GENERAL JOURNAL
DATE DESCRIPTION REF DEBIT CREDIT
14
S5-6
GENERAL JOURNAL
DATE DESCRIPTION REF DEBIT CREDIT
15
S5-6
Accounts Receivable Sales
10,000 1,000 10,000
Bal 9,000
Bal 1,000
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S5-6
GENERAL JOURNAL
DATE DESCRIPTION REF DEBIT CREDIT
Cash 8,820
Sales Discount 180
Accounts Receivable 9,000
Collected on account
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S5-6
Accounts Receivable Sales
10,000 1,000 10,000
9,000
Bal 0
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S5-7
Sales $10,000
Sales Returns & Allowances (1,000)
Sales Discounts (180)
Net Sales $8,820
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SALES RETURN AND
SALES ALLOWANCES
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Objective 2
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Operating Cycle of a
Merchandising Business
Accounts
Cash
Receivable
Inventory
22
Inventory Systems
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Purchase of Inventory
S5-1
GENERAL JOURNAL
Purchases 10,000
Accounts Payable 10,000
Purchased inventory/stocks
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Purchase Discounts
• A deduction from the invoice price granted
to encourage early payment of the amount
due
– 2/10, n/30
– n/30
– eom
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Purchase of Inventory
S5-2
GENERAL JOURNAL
DATE DESCRIPTION REF DEBIT CREDIT
Purchase Discounts
200
Bal 200
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Purchase Returns and
Allowances
• Purchase Return - Merchandise returned
by the purchaser to the supplier
• Purchase Allowance - A reduction in the
cost of defective merchandise received by
a purchaser from a supplier
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Purchase Returns and
Allowances – S5-2
GENERAL JOURNAL
Purchases 100,000
Accounts Payable 100,000
Purchased inventory/stocks
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Purchase Returns and
Allowances – S5-2
GENERAL JOURNAL
DATE DESCRIPTION REF DEBIT CREDIT
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Purchase Returns and
Allowances – S5-2
GENERAL JOURNAL
DATE DESCRIPTION REF DEBIT CREDIT
Seller Buyer
Goods
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Transportation Costs
• Freight in (Buyer pays for the freight)
– Transportation cost on purchased goods
– Debit Freight In/ Transportation In
• Freight-out (Seller pays for the freight)
– Transportation cost on goods sold
– Debit an expense (delivery expense/freight-
out)
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E5-15
GENERAL JOURNAL
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E5-15
GENERAL JOURNAL
Bal 300
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E5-15
GENERAL JOURNAL
DATE DESCRIPTION REF DEBIT CREDIT
Purchases P19,600
Add Freight In 1,000
Total cost of goods delivered 20,600
Less: Purchase Returns & Allowances P2,000
Purchase Discount 352 2,352
Net Cost of Purchases P18,248
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To illustrate assume that during the year total purchases amounted
to P50,000 representing 200 chairs bought at P250 each. At the end
of the year, a physical count of chairs showed 70 are still on hand.
Cost of goods sold is computed as follows:
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Merchandise
Inventory Purchases (100)
January 1 (70) P25,000
P17,500 (new stock)
(old stock)
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Merchandise Inventory, Jan 1 (70 at P250) P 17,500
Add: Purchases (100 X P250) 25,000
Total Goods Available for Sale (170 at P250)
42,500
Less: Merchandise Inventory, Dec 31 (50 X P250) 12,500
Cost of Sales (120 X P250) P 30,000
If the 120 books were sold at a 50% mark up or P125 plus P250, then sales price was
P375 resulting to a total gross profit of P15,000 computed as follows:
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PURCHASES FREIGHT IN
f
F
Debited for cost Debited for cost of
of goods bought transporting goods
under the term
FOB shipping point
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Objective 3
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Cost of Goods Sold – Periodic
Inventory System
Beginning Inventory
+ Purchases
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Cost of Goods Sold – Periodic
Inventory System
Cost of Sales
- Ending Inventory
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Cost of Goods Sold – Periodic
Inventory System
Beginning Inventory
+ Purchases (Net) or Net Cost of Purchases
Goods Available for Sale
- Ending Inventory
Cost of Sales
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a. Sales 170,000
Less: Sales discounts 3,000
Sales ret & allow 15,000 18,000
Net sales 152,000
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b. Inventory, May 31, 20X6 $19,000
Add: Net Purchases Purchases
$82,000
Add: Freight in 4,000
Total Cost of Goods Delivered 86,000
Less:Purchases discounts 2,000
Purchases ret & Allow 8,000 10,000 76,000
Total Goods available for sale $95,000
Less: Inventory, May 31, 20X7 21,000
Cost of Sales $74,000
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c. Net sales $152,000
Cost of sales (74,000)
Gross profit $78,000
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