Acct 5

acid test ratio

(cash+account receivable)/(accounts payable+other current liabilities)

- Interpret purchase discounts

...

- Compute merchandise available for sale and ending inventory (flow of inventory).

beginning merch inventorry +total cost of merch purchases-cost of goods sold= ending merch inventory sales-cost of goods sold=gross profit gross profit-expenses=net income/lose

nov 7 purchase of 1000 2/5 nov 21

debit account payable 1000 credit cash 980 credit merchandise inventory 20

purchase 400 cost 100

debit merchandise inventory 100 credit cost of goods sold 100 debit sales returns and allowances 400 credit account receivable 400

purchase return

debit sales return and allowance 500 credit accounts receivable 500 debit merchandise inventory 150 credit cost of goods sold 150

- Describe merchandise inventory

merchandise consists of goods that a company acquires to resell to consumers goods a company owns and expects to sell to its customers

-Describe multiple-step and single-step income statements.

multiple step income statement includes detailed computations of net sales, of expenses, including subtotals for various expense categories, operating expenses are usually classified into selling expenses/general and administrative expenses multiple step -net sales -cost of sales -gross profit other operating expenses other operating income royalty and commission income -operating profit financial income financial expenses income before taxes income taxes net income or loss single step revenues net sales other operating income royalty and commission income fanancial income total revenues expenses cost of sales other operating expenses financial expenses income taxes total expenses net income or loss

- Compute net sales and gross profit.

net sales=sales-sales discounts-sales returns/allowances gross profit=sales-sales discounts-sales returns/allowances-cost of goods sold gross margin ratio=net sales-cost of goods sold/net sales

periodic entries

purchased units purchases-debit accounts payable-credit return recieved full credit accounts payable-debit purchase return and allowance-credit paid dues minus return accounts payable-debit purchase discounts-credit cash-credit sold merch accounts receivable-debit sales-credit no entires for stock merch sales return sales returns/allowances-debit account receivable-credit received paymeny - sale discount sales discounts-debit cash-debit account receivable-credit

adjusting entries

sales salaries 1700 sales salaries expense 1700 salaries payable 1700 prepaid selling expense 2000 selling expenses 2000 prepaid selling expenses 2000 merch inventory decreased 29900 2 29332 cost of goods sold 568 merch inventory 568

- Analyze and record transactions for merchandise purchases (using a perpetual system).

to record credit sale seller sold account receivable-debit sales-credit to record cost of credit sale cost of goods sold-debit merchandise inventory-credit to record sales return sales return and allowances-debit account receivable-credit restore cost of returned goods to inventory merchandise inventory-debit cost of goods sold-credit received payment for amount die less sale sale discount-debit cash-debit account receivable-credit person purchased made using credit merchandise inventory account payable paid shipping merchandise inventory cash returned purchase account payable merchandise inventory ending account payable merchandise inventory cash credit return allowance merchandise inventory-debit account payable-credit account payable-debit merchandise inventory- credit account payable-debit cash,merchandise inventory-credit for inventory shrinkage(merchandise inventory-available merchandise) cost of goods sold-debit merchandise inventory-credit when closing balances with shrinkage cost of goods sold is added with shrinkage of inventory purchased made merchandise inventory-debit account payable-credit pays cash with discount account payable-debit merchandise inventory-credit cash-debit return cash-debit merch inventory- credit pays for transportation cost merch inventory-debit cash-credit buyer sells product account receivable-debit sales-credit cost of product to seller cost of goods sold-debit merch inventory-credit buyer makes returns sales return and allowance account receivable put return back into merch inventory merch inventory cost of goods sold