Chapter 5: Merchandising operations. After completing this chapter you should be able to: Describe merchandising activities and identify income components for a merchandising company, identify and explain the inventory asset and cost flows of a merchandising company.
Chapter 4 - Reporting and analyzing merchandising operations. When you finish this chapter, you should: Describe merchandising activities and identify income components for a merchandising company, identify and explain the inventory asset and cost flows of a merchandising company, compute the acid-test ratio and explain its use to assess liquidity, compute the gross margin ratio and explain its use to assess profitability.
Your goals for this “merchandising” chapter are to learn about:
Merchandising businesses and related sales recognition issues.
Purchase recognition issues for the merchandising business.
Alternative inventory system: The perpetual method.
Enhancements of the income statement.
The control structure.
Andre Sampri Sporting Goods Store purchases sporing goods merchandise on account from various vendors. Below is an invoice from Tennis Wear World.
Prepare Andre Sampri’s journal entries for each of the following transactions, assuming use of a periodic inventory system and the “gross method” of recording:
To record the invoice on May 15.
To record the return of the Summer Fun collection on May 17.
To record the payment of the balance due if payment occurred on May 20.
To record the payment of the balance due if payment occurred on May 30....
Chapter 3 - Basic cost management concepts. In this chapter, the learning objectives are: Understand the strategic role of basic cost concepts ; explain cost-driver concepts at the activity, volume, structural, and executional levels; explain the cost concepts used in product and service costing; demonstrate how costs flow through the accounting system; prepare and interpret an income statement for both a manufacturing firm and a merchandising firm.
Chapter 6 – Accounting for merchandising activities. After reading the material in this chapter, you should be able to: Describe the operating cycle of a merchandising company, define subsidiary ledgers and explain their usefulness, account for purchases and sales of merchandise in a perpetual inventory system, explain how a periodic inventory system operates,...
Little-Bug Corp International publishes children’s books. Following are facts you need to prepare Little-Bug Corp’s August bank reconciliation:
Balance per company records at end of month $217,932.36
Bank service charge for the month 132.00
NSF check returned with bank statement 4,321.98
Note collected by the bank during the month 135,000.00
Outstanding checks at month end 94,660.71
Interest on note collected during the month 13,500.00
Balance per bank at end of month 432,671.97
Deposit in transit at month end 23,967.12...
Alpine Medical Corporation (AMC) accepts credit card payments from its patients. Following are the batched transactions for May 19.
1) Total charges on MoreMoney and Wind credit cards were $42,000. These cards are “bank cards” and AMC receives daily cash settlement directly to its bank account, net of service charges of 1.5%.
2) Total charges on EuropeanExpress cards were $6,000. This card is not a bank card, and settlement does not occur until approximately two weeks following the date of the transaction.
Jill Hansen owns Interior Designs, a furniture store. One of her most popular items is a leather recliner.
Following is the recliner inventory activity for August. The recliners on hand at August 1 had a unit cost of $280.
In October 1993, Brian Shortland of Woolworths plc was considering the results of a 12 month
project in which he had reviewed the supply chain systems operated by the company for
sourcing merchandise from South East Asia. It was clear that a major overhaul of the
company’s operation was required and he was contemplating how best to present the results
of his review and his recommendations for improvements to the next Woolworths’ Board
Meeting which would be held in ten weeks time.
We will look at inventory for two classes of businesses. For merchandising companies like Wal-Mart, goods are acquired from a supplier for resale to the final consumer. In a manufacturing operation, the company normally has three inventories.
Chapter 9 - Financial planning and analysis: The master budget. After completing this chapter, you should be able to: Explain the relationship between financial planning and analysis and the master budget; list and explain five purposes of budgeting; describe the similarities and differences in the operational budgets prepared by manufacturers, service-industry firms, merchandisers, and nonprofit organizations;...