Survey of accounting 6e chapter 4

Accounting for Merchandising Businesses Chapter ©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 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 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 Learning Objective 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 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 Freight Exhibit 9: Freight 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 TechUSA - Freight ©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 Taxes When sale is made, for is recorded as an obligation by the _ _ is made to _ taxing authority to _ ©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 Illustrate the dual nature of merchandising 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 Dual Nature of Merchandise Transactions Company A records a sale Company B records a purchase ©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 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 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 TechUSA - 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 End of Chapter ©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 ... 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...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... 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