ACCT 200 Lecture 10: Merchandising Operations and the Multiple-Step Income Statement

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mauvecricket694

7 Oct 2016

School

University of Arizona

Department

Accounting

Course

ACCT 200

Professor

Silverberg

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Document Summary

Retailers: merchandising companies that purchase and sell directly to consumers. Cost of goods sold (cogs): the total cost of merchandise sold during the period. Sales revenue cogs = gross profit. Gross profit operating expenses = net income/loss. Merchandisers ordinarily have longer operating cycles than service companies. Beginning inventory + cost of goods purchased = cost of goods available for sale. Cost of goods available for sale cost of goods sold = ending inventory. Two systems are used to account for inventory. Perpetual inventory system: companies maintain detailed records of the cost of each inventory purchase and sale. Continuously show the inventory that should be on hand for every item. Cogs is determined each time a sale occurs. Periodic inventory system: companies do not keep detailed inventory records of the goods on hand throughout the period. Determined cogs only at the end of the accounting period. Companies that sell merchandise with high unit values have traditionally used perpetual systems.

Related Questions


	Periodic Inventory Method

	Better Bottles, Inc. uses a PERIODIC inventory system and has the following information available:

	Description	# of Units	Cost per Unit	Total Cost
	Beginning inventory	20	$20.00	$400
	Jan 5 sold	15
	Jan 15 purchase	27	$22.00	594
	Jan 18 sold	21
	Jan 20 purchase	33	$30.00	990
	Total goods available for sale	80		$1,984

	Total goods sold	36


	Required:
1	Calculate both Cost of goods sold and Ending inventory using the Periodic FIFO Method.
2	Calculate both Cost of good sold and Ending Inventory using Periodic LIFO Method.
3	Use your calculations from 1-2 and complete the Income Statement.
	The company income tax rate:	0.25

1	FIFO Cost of Goods Sold - PERIODIC
	Units Sold Taken From:	# of Units	Cost per Unit	Total Cost


	Total Cost of Goods Sold FIFO


	FIFO Ending Inventory - PERIODIC
	Inventory Available	# of Units	Cost per Unit	Total Cost
	Beginning inventory
	+Purchase
	+Purchase
	(Less Cost of Goods Sold)
	Ending Inventory FIFO



2	LIFO Cost of Goods Sold - PERIODIC
	Units Sold Taken From:	# of Units	Cost per Unit	Total Cost


	Total Cost of Goods Sold LIFO


	LIFO Ending Inventory - PERIODIC
	Inventory Available	# of Units	Cost per Unit	Total Cost
	Beginning inventory
	+Purchase
	+Purchase
	(Less Cost of Goods Sold)
	Ending Inventory LIFO



3	Income Statement - Periodic Inventory Method
		FIFO	LIFO
	Sales revenue, net	25,000	25,000
	Cost of goods sold
	Gross profit
	Operating expenses	8,000	8,000
	Operating income before tax
	Income tax expense
	Net income

plumporpoise441

Choose the correct answer for the below:

When the periodic inventory system is used:

operating profit from the sale of an item from inventory is known when the item is sold.
gross profit from the sale of an Item from inventory is known when the item is sold.
cost of goods sold can be calculated by subtracting the ending Inventory amount from the sum of beginning inventory and net purchases.
a physical inventory must be taken In order to estimate the cost of goods sold.

ivoryalligator673

21. Altira Corporation uses a periodic inventory system. Thefollowing information related to its merchandise inventory duringthe month of August 2016 is available:


Aug.1	Inventory onhandâ2,000 units; cost $6.10 each.
8	Purchased 10,000units for $5.50 each.
14	Sold 8,000 units for$12.00 each.
18	Purchased 6,000units for $5.00 each.
25	Sold 7,000 units for$11.00 each.
31	Inventory onhandâ3,000 units.

Required:

Determine the inventory balance Altira would report in itsAugust 31, 2016, balance sheet and the cost of goods sold it wouldreport in its August 2016 income statement using each of thefollowing cost flow methods: (Round "Average Cost per Unit"to 2 decimal places.)

FIFO	Cost of Goods Available for Sale			Cost of Goods Sold - Periodic FIFO			Ending Inventory - Periodic FIFO
FIFO	# of units	Cost per unit	Cost of Goods Available for Sale	# of units sold	Cost perunit	Cost of Goods Sold	# of units in ending inventory	Cost per unit	Ending Inventory
BeginningInventory	2,000	$6.10	$12,200	2,000	$6.10	$12,200		$6.10	$0
Purchases:
August 8	10,000	$5.50	55,000		$5.50			$5.50	0
August 18	6,000	$5.00	30,000	3,000	$5.00	15,000		$5.00
Total	18,000		$97,200	5,000		$27,200	0		$0

AverageCost	Cost ofGoods Available for Sale			Cost ofGoods Sold - Average Cost			EndingInventory - Average Cost
AverageCost	# of units	Average Cost per unit	Cost of Goods Available for Sale	# of units sold	Average Cost per Unit	Cost of Goods Sold	# of units in ending inventory	Average Cost per unit	Ending Inventory
Beginning Inventory
Purchases:
August 8
August 18
Total	0		$0			$0			$0

LIFO	Cost of Goods Available for Sale			Cost of Goods Sold - Periodic LIFO			Ending Inventory - Periodic LIFO
LIFO	# ofunits	Cost perunit	Cost ofGoods Available for Sale	# of unitssold	Cost perunit	Cost ofGoods Sold	# of unitsin ending inventory	Cost perunit	EndingInventory
Beginning Inventory	2,000	$6.10	$12,200		$6.10	$0		$6.10
Purchases:
August 8	10,000	$5.50	55,000		$5.50			$5.50
August 18	6,000	$5.00	30,000		$5.00			$5.00	0
Total	18,000		$97,200	0		$0	0		$0

erinsalmon861

ACCT 200 Lecture 10: Merchandising Operations and the Multiple-Step Income Statement

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