MindMap Gallery Accounting for Merchandising Operations

Accounting for Merchandising Operations

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Edited at 2020-09-28 13:12:59

Lisa Anderson

Accounting for Merchandising Operations

Lisa Anderson

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Accounting for Merchandising Operations

Accounting in merchandisingcompany periodic inventory system

Incom statement

Accounting for revenue from sales

Accounting for revenue from sales in merchnadising company whichused the periodic inventory system is basically the same as that of amerchandising company which used the perpetual inventorysystem

Accounting for cost of goods sold

Accounting for perchases of merchandise

Accounting for purchases at the gross method

Accounting for purchases withpurchases discounts

Accounting for purchases at the netmethod and control of purchasesdiscounts

Accounting for purchases returns and allowances

In periodic inventory system, it is credited purchases returnsand allowances account: this account is a contra account and isaccordingly đeucted from purchases in the incomestatement

Freight in

Accounting for freight in in merchnadising company which usedthe periodic inventory system is basically the same as that of amerchandising company which used the perpetual inventorysyste

Accounting for merchandise inventory cost of goods sold

Accounting for operating expenses

Accounting for operating expenses in merchnadising companywhich used the periodic inventory system is basically the same as thatof a merchandising company which used the perpetual inventorysystem

Income summary

End of the accounting period, income or loss is counted bypreparing the closing entries depend on whether usingincome summary account

Prepare the work sheet under periodicinventory system

The adjusting entry method

The closing entry method

Accounting in merchandisingcompany perpetual inventory system

Income statement

Accounting for revenues from sales

Gross sales

Sales returns and allowances

Sales discounts

Accounting for cost of goods sold

Net purchases and net cost of purchases

Accounting for purchases at the gross method

Accounting for purchases withpurchases discounts

Accounting for purchases at the netmethod and control of purchasesdiscounts

Accounting for purchases returns and allowances

In perpetual inventory system: purchases returns andallowances is decreased merchadise inventory and isdecreased account payable

Freight in

Freight in (transportation in) is customany forr the supplier(seller) pay transportation costs or it is customany for thepurchases to pay transportation charges on merchandise

The supplier pays the freight charges but bills the buyer byincluding them as a separate accounts item on the salesinvoice

Accounting for merchandise inventory cost of goods sold

Accounting for operating expenses

Operating expenses is the third major of theincome statement for a merchandisingconcern

include

selling expenses

general and administrative expenses

Income summary

End of the accounting period, income or loss is counted bypreparing the closing entries depend on whether usingincome summary account

The work sheet for a merchandising concern

The work sheet of a merchandising business perpetualinventory system is basically the same as that of a servicebusiness

Except that it has to deal with the new accounts

Overview

Income statement for a merchandisingconcern. It has three major parts

Revenue from sales

Cost of goods sold

Operating expenses

Operating cycle in merchandising company begins withthe purchase and to end with sales on credit or sales forcash

Trade discounts

Sales discounts

Shipping terms