Accounting Notes: Sales and Cost of Merchandise
A. * Jan 4 acc rec 3900 * Sales 3900 * Jan 4Cost of merchandise sold 2630 * Merchandise inventory 2630
Sales 3900
Cost of merchandise sold 2630
Gross profit 1270
Ending inventory 3250
B.
* Jan 4 acc rec 3900 * Sales 3900 * Jan 4 cost of merchandise sold 2660 * Merchandise inventory 2660
Sales 3900
Cost of merchandise sold 2660
Gross profit 1240
Ending inventory 3220
Inventory system 1. Perpetua: record sales and cost of merchandise sold uses FIFO LIFO 2. Periodic: records sales only FIFO LIFO and average
CMS=MAFS-EI
* Perpetual inventory
* a/r 200 * sales 200 * CMS 80 * Merchandise inventory 80
Periodic inventory only sales recorded when inventory is sold. CMS is determined at the end of the accounting period
Periodic inventory=physical count of E.I.
100 x 20=2000
80 x 21=1680
100 x22 =2200
280 5880
MAFS=beginning of inventory + net purchases
CMS=MAFS-E.I
A. FIFO B. AYC C. LIFO
EI=150 units
FIFO
Jan 10 50x21=$1050
Jan 30 100x22=$2200 150 $3250
MAFS=$5880
EI= (3250)
CMS= 2630
AVC
AVG unit cost= MAFS/total units
$5880/280=$21 per unit
150x21=$3150
5880-3150=2730
LIFO
Jan 1-100 units x 20=2000
Jan 10 -50 x21=1050 150 $3050
MAFS=5880
EI= (3050)
CMS=$2830
Accounting principles (G. A.A.P.)
Principles of conservatism
Inventory generally is based on cost, except when replacement cost is lower than actual cost
(Ex. Home purchased in 2004 for $300000 in 2013 inlet value $210000)
Report LOCOM or LCM
Lower of cost or market whichever is lower
Unrealized gain
Paper gain
Unrealized loss
Inventory qty. A. 400 $10.25 9.50 4100 3800 3800 B. 120 22.50 24.10 2700 2892 2700 C. 600 8.00 7.75 4800 4650 4650 D. 280 14.00 14.75 3920 4130 3920
Total 15520 15472 15070
Effect of inventory
Sales 3900
Cost of merchandise sold 2630
Gross profit 1270
Ending inventory 3250
B.
* Jan 4 acc rec 3900 * Sales 3900 * Jan 4 cost of merchandise sold 2660 * Merchandise inventory 2660
Sales 3900
Cost of merchandise sold 2660
Gross profit 1240
Ending inventory 3220
Inventory system 1. Perpetua: record sales and cost of merchandise sold uses FIFO LIFO 2. Periodic: records sales only FIFO LIFO and average
CMS=MAFS-EI
* Perpetual inventory
* a/r 200 * sales 200 * CMS 80 * Merchandise inventory 80
Periodic inventory only sales recorded when inventory is sold. CMS is determined at the end of the accounting period
Periodic inventory=physical count of E.I.
100 x 20=2000
80 x 21=1680
100 x22 =2200
280 5880
MAFS=beginning of inventory + net purchases
CMS=MAFS-E.I
A. FIFO B. AYC C. LIFO
EI=150 units
FIFO
Jan 10 50x21=$1050
Jan 30 100x22=$2200 150 $3250
MAFS=$5880
EI= (3250)
CMS= 2630
AVC
AVG unit cost= MAFS/total units
$5880/280=$21 per unit
150x21=$3150
5880-3150=2730
LIFO
Jan 1-100 units x 20=2000
Jan 10 -50 x21=1050 150 $3050
MAFS=5880
EI= (3050)
CMS=$2830
Accounting principles (G. A.A.P.)
Principles of conservatism
Inventory generally is based on cost, except when replacement cost is lower than actual cost
(Ex. Home purchased in 2004 for $300000 in 2013 inlet value $210000)
Report LOCOM or LCM
Lower of cost or market whichever is lower
Unrealized gain
Paper gain
Unrealized loss
Inventory qty. A. 400 $10.25 9.50 4100 3800 3800 B. 120 22.50 24.10 2700 2892 2700 C. 600 8.00 7.75 4800 4650 4650 D. 280 14.00 14.75 3920 4130 3920
Total 15520 15472 15070
Effect of inventory