12- 1 preparing a worksheet for a merchandise company chapter 12
TRANSCRIPT
12- 1
Preparing a Worksheet for
a Merchandise Company
Chapter 12
12- 2
Learning Objective 1
Figuring adjustments formerchandise inventory, unearned
rent, supplies used, insuranceexpired, depreciation expense,
and salaries accrued.
12- 3
Learning Unit 12-1
In a periodic inventory system, inventory is counted at the end of the accounting period.
Adjusting entries are needed to update to this balance.
12- 4
Beginning Inventory
Net Purchases
+
Ending Inventory=
Cost of Goods Sold
–
Learning Unit 12-1
Freight-in
+
12- 5
Learning Unit 12-1
What are some adjustments for merchandise inventory?
Credit beginning inventory to remove this “old” inventory balance.
Debit ending inventory for the counted and priced amount to leave this balance in the Inventory account.
This is the balance that will be on the balance sheet.
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Learning Unit 12-1
Merchandise InventoryBeginning
Balance19,000
Income SummaryAdjustment
19,000
Adjustment19,000
Adjustment4,000
Adjustment4,000
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First MonthBALANCE SHEETAssetsBeginning inventory$19,000 (assume sold)
First MonthBALANCE SHEETAssetsBeginning inventory$19,000 (assume sold)
Second MonthBALANCE SHEETAssetsBeginning inventory $4,000
Second MonthBALANCE SHEETAssetsBeginning inventory $4,000
INCOME STATEMENTCost of goods soldBeginning inventory $19,000Less ending inventory$4,000
INCOME STATEMENTCost of goods soldBeginning inventory $19,000Less ending inventory$4,000
Learning Unit 12-1
12- 8
Learning Unit 12-1
Accounts Affected Category RulesAccounts Affected Category Rules
Merchandise Inventory Asset Dr.Income Summary Cr.Merchandise Inventory Asset Dr.Income Summary Cr.— —
12- 9
Learning Unit 12-1
Assume that Martha received $600 in advance for renting a room to an art dealer for three months. Is the $600 considered rental revenue?
No. Unearned Rent is a liability account. This account is used to record rent
payments received from renters in advance.
12- 10
Learning Unit 12-1
The rent will not be earned until the months have gone by.
The rental money will be recorded as revenue only after the unit is used for each month.
What accounts will be affected at the end of the month?
Unearned Rent and Revenue
12- 11
Learning Unit 12-1
Accounts Affected Category RulesAccounts Affected Category Rules
Unearned Rent Liability Dr. 200 Rental Income Revenue Cr. 200Unearned Rent Liability Dr. 200 Rental Income Revenue Cr. 200
Adjustment for Rent
12- 12
Learning Unit 12-1
Accounts Affected Category RulesAccounts Affected Category Rules
Supplies Expense Expense Dr. 500 Supplies Asset Cr. 500Supplies Expense Expense Dr. 500 Supplies Asset Cr. 500
Adjustment for Supplies
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Learning Objective 2
Preparing a worksheet for
a merchandise company.
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Worksheets for merchandise
companies include accounts that aid in accounting for
inventories.
Worksheets for merchandise
companies include accounts that aid in accounting for
inventories.
Worksheets
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Adjusted Income Balance Trial Balance Statement Sheet
Account Title Dr. Cr. Dr. Cr. Dr. Cr.CashMerch.InventoryReceivablesSuppliesEquipmentAccounts payableCapitalSalesSales ReturnsPurchasesPurchases Returns
Totals
4,0651,850
200100
1,200
2001205
8,820
3205,0003,450
508,820
2001,205
1,405
3,450
503,500
4,065
1,850
200100
1,200
7,415
3205,000
5,320 2,095 2,095 3,500 3,500 7,415 7,415
Net income
Worksheet Example
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Learning Unit 12-2
The worksheet provides the information needed to prepare the expanded income statement needed for a merchandising company.
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Learning Unit 12-2
The income statement columns balance with a net income if the columns must have a debit entry to balance them.
The income statement columns balance with a net loss if the columns must have a credit entry to balance.
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Sales revenue $3,450Sales discounts 0Returns and allowances – 200Net sales revenue $3,250Cost of goods sold –1,155Gross profit $2,095
Sales revenue $3,450Sales discounts 0Returns and allowances – 200Net sales revenue $3,250Cost of goods sold –1,155Gross profit $2,095
Learning Unit 12-2
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Gross Profit
–
Operating Expenses
=
Net Income
Learning Unit 12-2
12- 20
Perpetual Inventory
The Purchases account, Purchases Returns and Allowance account, and the Purchases Discount account are not used.
Merchandise Inventory is debited when purchases are made.
Merchandise Inventory is credited when sales are made.
Merchandise Inventory is credited for any discounts, returns, or allowances.
12- 21
End of Chapter 12