Survey of accounting 6e chapter 4

Accounting for Merchandising
Businesses

Chapter
4

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.


Learning Objectives
After studying this chapter, you should be able to:
•

Distinguish the activities and financial statements of a
service business from those of a merchandising
business.

•

Describe and illustrate the financial statements of a
merchandising business.

•

Describe the accounting for the sale of merchandise.

•

Describe the accounting for the purchase of
merchandise.

•

Describe the accounting for freight and sales taxes.

•

Illustrate the dual nature of merchandising
transactions.

•

Describe the accounting for merchandise shrinkage.

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.


Learning
Objective 1
Distinguish the activities and financial
statements of a service business from
those of a merchandising business

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.


Service Businesses vs.
Merchandise Operations
• ______________ Businesses
– Revenue activities involve
providing _______ to

___________.
– Example: Family Health Care, P.C.

• _________________ Operations
• Revenue activities involve the
________ and ______ of _________.
• Example: Home Depot Inc.

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.


Gross Profit for a Merchandise
Operation
Gross Profit = _____ ________ – ________
• Net Sales: _________ less ______ and
_______
• _____ of ______ ______: cost paid for
merchandise

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.


Learning
Objective 2
Describe and illustrate the
financial statements of a
merchandising business

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.

TechUSA – Multiple-Step Income
Statement
Exhibit 1: Multiple- Step Income Statement

Considers
__________
_______ and
___________

Assume a __________
inventory system

Measures income/loss
from the core operations
of the business
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.


TechUSA – Cost of Merchandise
Sold – Periodic Inventory
Exhibit 2: Cost of Merchandise Sold

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.


TechUSA – Income Statement
Exhibit 3: Single-Step Income Statement

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.

TechUSA – Retained Earnings
Statement
Exhibit 4: Retained Earnings Statement for Merchandising Business

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.


TechUSA – Balance Sheet
Exhibit 5: Report form of Balance Sheet

Value of units __ ____, not _____

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.


TechUSA – Statement of Cash Flows
Exhibit 6: Statement of Cash flows for Merchandising Business

Equals ____ on _______ _____
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.


Learning
Objective 3
Describe the accounting for the
sale of merchandise

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.

TechUSA - Sales Transactions

__________
________
_____________
_____________
________

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.


Sample Sales Invoice
Exhibit 8: Invoice

______ terms
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.


Sales Discounts

_____ period

_____ date

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.


TechUSA - Sales Discounts

__________

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.


Sales Returns and Allowances

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.


TechUSA - Sales Returns and
Allowances

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.


Learning
Objective 4
Describe the accounting for the
purchase of merchandise

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.


Purchase Transaction - Using
the Perpetual System

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.

Purchases Discounts

__________
_______

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.


Purchases Returns and
Allowances

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.


TechUSA - Return of Merchandise

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.


Learning
Objective 5
Describe the accounting for
freight and sales taxes

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.