Textbook Notes (378,302)
CA (167,125)
UTSC (19,207)
MGA (381)
MGAB01H3 (127)
Liang Chen (50)
Chapter

Periodic Inventory System

2 Pages
138 Views

Department
Financial Accounting
Course Code
MGAB01H3
Professor
Liang Chen

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Periodic Inventory System
¾ In periodic inventory system, there is no attempt made on the date of sale to record
the cost of the merchandise sold. This is done at the end of the accounting period
where a physical inventory count is taken
¾ Purchases of inventory is recorded under purchase expense instead of merchandise
inventory
¾ Purchase returns and allowances and Freight in are also recorded in separate accounts
Recording sales of Merchandise
¾ In periodic inventory system, when recording a sale, the cost of the sales is not
recorded. Instead, the cost of the goods sold is determined by calculation at the end of
the period. This applies to sales returns as well
Recording Purchases of Merchandise
¾ ,QSHULRGLFLQYHQWRU\V\VWHPWKHDFFRXQW³SXUFKDVHV´LVXVHGZKHQWKHUHLVD
purchase of meUFKDQGLVH:KHQPHUFKDQGLVHLVUHWXUQHGWKHDFFRXQW³SXUFKDVH
UHWXUQVDQGDOORZDQFLVXVHGDVDFRQWUDDFFRXQWWRWKH³SXUFKDVHDFFRXQW
¾ :KHQWKHSXUFKDVHUSD\VIRUIUHLJKWFRVWVWKHDFFRXQW³IUHLJKWLLVGHELWHG)UHLJKW
in is part of the cost of goods purchased
Cost of Goods Sold
¾ There are three steps in determining costs of goods sold : record purchases of
merchandise, determine the cost of goods purchased, and determine the cost of goods
on hand at the beginning and end of the accounting period
¾ Determining Cost of goods purchased
Purchases ± Purchases returns and allowance = net purchases
Net purchases + Freight in = Costs of goods purchased
¾ Determining Cost of goods on hand
Count all the units on hand
Apply unit costs to the total units on hand for each item of inventory
Total the costs for each item of inventory, to determine the total cost of goods
on hand
¾ Calculating Cost of goods sold
Beginning inventory + cost of goods purchased = cost of goods available for
sale
Cost of goods available for sale ± ending inventory = cost of goods sold
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Description
Periodic Inventory System In periodic inventory system, there is no attempt made on the date of sale to record the cost of the merchandise sold. This is done at the end of the accounting period where a physical inventory count is taken Purchases of inventory is recorded under purchase expense instead of merchandise inventory Purchase returns and allowances and Freight in are also recorded in separate accounts Recording sales of Merchandise In periodic inventory system, when recording a sale, the cost of the sales is not recorded. Instead, the cost of the goods sold is determined by calculation at the end of the period. This applies to sales returns as well Recording Purchases of Merchandise ,3507L4L.L3;03947889029K0,..4:395:7.K,808L8:80ZK039K070L8, purchase of me7.K,3L80 :K03207.K,3L80L8709:7309K0,..4:395:7.K,80 709:738,3,OO4Z,3.0L8:80,8,.4397,,..4:39949K05:7.K,808,..4:39 :K039K05:7.K,8075,8147170LJK9.48989K0,..4:39170LJK9L3L80-L
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