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McGraw-Hill/Irwin
Cash
Accounts Receivable
3.
Inventory
2. Sale of merchandise on account
McGraw-Hill/Irwin
McGraw-Hill/Irwin
#holesalers buy merchandise from several different manufacturers and then sell this merchandise to several retailers.
McGraw-Hill/Irwin
Retailers sell merchandise directly to the ublic. The McGraw-Hill Companies, Inc., 2002
Cost of goods sold re resents the e" ense of goods that are sold to customers.
McGraw-Hill/Irwin
1ross rofit is a useful means of measuring the rofitability of sales transactions. The McGraw-Hill Companies, Inc., 2002
Subsidiary -edger 5a9e S ar9s (ebit Credit 3)*** 1)*** Subsidiary -edger 8eather 5acobs (ebit Credit
2)***
McGraw-Hill/Irwin
McGraw-Hill/Irwin
McGraw-Hill/Irwin
McGraw-Hill/Irwin
Cost
McGraw-Hill/Irwin
The McGraw-Hill Companies, Inc., 2002
McGraw-Hill/Irwin
McGraw-Hill/Irwin
McGraw-Hill/Irwin
At the end of the eriod) management com ares the hysical inventory count 6ith the inventory ledger to determine inventory shrin9age.
>n (ecember 31) #orley Co. counts its inventory. An inventory shortage of ,2)*** is discovered.
McGraw-Hill/Irwin
McGraw-Hill/Irwin
McGraw-Hill/Irwin
McGraw-Hill/Irwin
McGraw-Hill/Irwin
McGraw-Hill/Irwin
McGraw-Hill/Irwin
2/10, n/30
Read as. A:6o ten) net thirtyB
McGraw-Hill/Irwin
The McGraw-Hill Companies, Inc., 2002
2/10, n/30
Percentage of (iscount C of (ays (iscount Is Available >ther6ise) the %ull Amount Is (ue C of (ays 6hen %ull Amount Is (ue
McGraw-Hill/Irwin
The McGraw-Hill Companies, Inc., 2002
4et Method
McGraw-Hill/Irwin
Purchase discounts lost are recorded 6hen ayment is made outside the discount eriod. The McGraw-Hill Companies, Inc., 2002
McGraw-Hill/Irwin
McGraw-Hill/Irwin
McGraw-Hill/Irwin
1ross Method
Purchase discounts ta9en are recorded 6hen ayment is made inside the discount eriod.
The McGraw-Hill Companies, Inc., 2002
McGraw-Hill/Irwin
McGraw-Hill/Irwin
McGraw-Hill/Irwin
McGraw-Hill/Irwin
McGraw-Hill/Irwin
McGraw-Hill/Irwin
Credit terms and merchandise returns affect the amount of revenue earned by the seller.
McGraw-Hill/Irwin
The McGraw-Hill Companies, Inc., 2002
McGraw-Hill/Irwin
McGraw-Hill/Irwin
Contra!revenue Contra!revenue
McGraw-Hill/Irwin
McGraw-Hill/Irwin
Sales "iscounts
On &uly ', ,id-s Clothes sold $),000 of merchandise to (lay Clothes on credit *ith terms of $+10, n+30. 1he merchandise originally cost ,id-s Clothes $$,000. "ecause ,id-s Clothes uses a perpetual in%entory system, they must ma0e t*o entries.
McGraw-Hill/Irwin
Sales "iscounts
On &uly ', ,id-s Clothes sold $),000 of merchandise to (lay Clothes on credit *ith terms of $+10, n+30. 1he merchandise originally cost ,id-s Clothes $$,000. "ecause ,id-s Clothes uses a perpetual in%entory system, they must ma0e t*o entries.
McGraw-Hill/Irwin
Sales "iscounts
On &uly 15, ,id-s Clothes recei%es the full amount due from (lay Clothes. (repare the .ournal entry for ,id-s Clothes.
,0)*** ,0)*** +DE +DE = = ,3)+2* ,3)+2*
McGraw-Hill/Irwin
Sales "iscounts
/o*, assume that it *asn-t until &uly $0 that ,id-s Clothes recei%ed the full amount due from (lay Clothes. (repare the .ournal entry for ,id-s Clothes.
McGraw-Hill/Irwin
"elivery '(penses
(elivery (elivery costs costs incurred incurred by by sellers sellers are are debited debited to to (elivery (elivery '" '" ense) ense) an an o o erating erating e" e" ense. ense.
McGraw-Hill/Irwin
McGraw-Hill/Irwin
22:rends :rendsovertime overtime 22Com Com arable arablestore storesales sales 22Sales Sales er ersIuare sIuarefoot foot of of selling selling s s ace ace
McGraw-Hill/Irwin