Measures of Central Tendency: Mean, Median and Mode
Accounting for Merchandising Operation
1. GROUP B
A Presentation
on Accounting MD. NIAZ ISLAM
for ID: 091800004
Merchandising S. M. ZUBAER HOSSAIN
Operation ID: 091800066
2. Objectives:
• T ident t differ bet een ser ice ent pr a mer ndising
o ify he ences w v er ise nd cha
company
• T expl in t r dingofpur ses underaper ua inv or syst
o a he ecor cha pet l ent y em
• T expl in t r dingofpur ses underaper inv or syst
o a he ecor cha iodic ent y em
• T expl in t st in t a
o a he eps he ccount cycl foramer ndisingcompa
ing e cha ny
3. Merchandising Structure
promoting and sustaining certain
categories called Merchandising
purchasing and selling directly called
retailing
selling to retailers called wholesaling
5. Operating Cycles
The operating cycle of a merchandising company ordinarily is
longer than that of a service company. We see_
6.
7. Flow of Costs
The cost flow system of merchandising company follows :
Perpetual System
Company keeps detailed records of the cost of each
inventory purchase and sale.
Records continuously perpetually shows the inventory
that should be on hand for every item.
9. To determine the cost of goods sold:
First, the cost of goods on hand at the
beginning of the period.
Add to that the cost of goods purchased.
A third, less cost of goods on hand at the end
of the period.
10. Recording System of purchasing under a perpetual
inventory system
Companies purchase inventory using cash or credit
Invoice include the terms:
1. Seller Information
2. Invoice date
3. Purchaser Information
4. Salesperson Information
5. Credit terms
6.Freight terms
7. Goods sold: Catalog number, description, quantity, price per unit
8. Total invoice amount
11. Purchase Returns and Allowances
When goods are damaged or defective The purchaser may return
the goods to the seller for credit through refundable cash.
Freight Costs
It involves FOB shipping point or FOB destination
Purchase Discounts
Purchasing in on account may permit the buyer to claim a
cash discount for prompt payment.
13. Sales revenues under a perpetual
inventory system
Selling revenues when the goods transfer from
the seller to the buyer.
Sales may be made on credit or for cash.
Business document should support every sales
transaction.
14. Sales Returns and Allowances
Client returns goods because they are damaged
or defective.
Merchandising Inventory and Cost of Goods sold
should be for the estimated value of the returned
goods, rather than their cost.
It is a debit account.
15. Sales Discounts
The seller may offer the customer a cash discount
called by the seller a sales discount.
The seller increases (debits) the Sales Discounts
account for discounts that are taken.
16. Steps in the accounting cycle for a
merchandising company
Adjusting Entries
An additional adjustment to make the records
agree.
The perpetual inventory records may be
incorrect due to recording errors. Thus, the
company needs to adjust the perpetual records
to make the recorded inventory amount agree.
17. Closing Entries
When a merchandising company, like a service
company, closes to Income Summary all
accounts that affect net income.
The company, credits all temporary accounts
with debit balances, and debits all temporary
accounts with credit balances.
18. Multiple step Income statement
Shows the steps in determining net income or net
loss
Help to determine net profit
Distinguish between operating and non-operating
activities
Highlights intermediate components of income and
sub grouping of expenses
19. Terms to be used in multiple step Income statement
Gross Profit:
Gross profit = Net sales – Cost of goods sold.
Gross Profit rate:
Gross Profit rate =
Operating Expense and Net income:
Net income = Gross Profit – Operating Expense
20. Non operating Activities
Revenue and expenses from auxiliary operations.
Gains and losses that are unrelated to the company operation .
Single step income statement
Only one step.
All data are classified under two categories: (i) revenues (ii) expenses.
The revenue category includes operating revenue, other revenue and gains.
The expenses include costs of goods sold, operating expense, other expense
and losses.
21. Some Important formulas to be used in calculation of
financial statement:
Net sales = Sales – Sales discount.
Cost of goods purchased = Purchases – Purchase return – Purchase
discount + Freight-in.
Cost of goods sold = Beginning inventory + Cost of goods purchase –
Ending inventory.
Gross profit = Net sales – Cost of goods sold.
Net income = Gross profit – Operating expense.
22. Recording Transaction under a Periodic
Inventory system
(i) On April 05, purchased on account merchandise from Allman
Company for $20,000 term2/10, net/30, FOB shipping point.
(Merchandise Purchase)
23. (ii) On April 08, returned damaged merchandise to Allman
Company and was granted a $4,000 allowance for returned
merchandise. (Purchase returns and allowances)
(iii) On April 10, paid freight costs of $900 on merchandise
purchased from Allman. (Freight costs)
24. (iv) On April 14, merchandiser pays the balance due (i, ii)
account to Allman Company, takes the 3% cash discount for
payment within 10 days. (Purchase discount)
Recording sales of merchandise
(i) On November 03, the sale of $4,800 to Allman Company
is recorded by seller. (Merchandise sales)
25. (ii) On November 06, a return of goods for $500 sales from
Allman Company (Sales returns & allowances)
(iii) On November 09, merchandiser receives a payment of $
4,500 on account from Allman Company. Sellers honor the 3%
cash discount. (Sales discount)
