-
merchandising operations
physical / tangible goods
-
purchase transactions
(perpetual system only)
- point of view = retailer acquiring inventory to sell
- we are the buyers
- entry:
- inventory X
- ---->cash or A/P X
-
sales transactions
(perpetual system only)
- point of view = retailer (seller) may offer buyer (customer) discount to encourage payment sooner, rather than at end of credit period
- we are the sellers
- entry:
- A/R X
- ---->sales X
- COGS X
- ---->inventory X
-
purchase transactions (perpetual system only)
point of view
- retailer acquiring inventory to sell
- we are the buyers
-
sales transactions (perpetual system only)
point of view
- retailer (seller) may offer buyer (customer) discount to encourage payment sooner, rather than at end of credit period
- we are the sellers
-
purchase transactions
entry
- entry:
- inventory X
- ---->cash or A/P X
-
-
mechandising inventory
includes all costs to get goods on retailer's shelf to sell
ex: raw cost, insurace, shipping
-
F.O.B Shipping point
(free on board)
- buyer (us) owns goods moment they're shipped
- pays for shipping
-
F.O.B. Selling point
(free on board)
- seller (manufacturer) still owns goods during shipment
- pays for goods to be shipped (we record nothing)
-
purchase discounts
manufacture (seller) may offer buyer a discount to encourage payment sooner, rather than at end of a credit period
-
-
2/10, net/30
buyer gets a 2% discount if pay within 10 days, otherwise, entire amount is due in 30 days
-
what type of entry is used for return merchandise?
reversing entry
- entry:
- A/P X
- ---->inventory X
-
allowance
- deducted BEFORE figuring discount
- keep the good, get discount
-
return
- deducted BEFORE figuring discount
- physically send goods back
-
what does discount reduce?
inventory
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