merchandise inventory
DESCRIPTION
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MERCHANDISE INVENTORY
Written by :LUFI YUWANA MURSITA
INTAN NOKA DEWI
Merchandise Inventory
Merchandise inventory is
products purchased or
manufactured for sale to customers
Merchandise Inventory
INCOMESUMMARY
SALESPURCHASES
SALESCOST OF
SALE
NOT ONLY
BUT ALSO
Merchandise Inventory
INVENTORYACCOUNTING
METHOD
INVENTORYACCOUNTING
METHOD
PERPETUALMETHOD
PERIODICAL/PHYSICALMETHOD
Merchandise Inventory
EXAMPLEInventory in the beginning of year 400.000January 1st X company buy merchandise inventory with amount 1000.000 by cash.The amount of Cost of Good Sold is 70% from the total sales
Merchandise inventory
Cash in bank
700.000
700.000
Perpetual Method
The journal
is. . .
Purchasestransactio
n
Merchandise Inventory
EXAMPLE
At January 5th company sells some of the inventory 500.000 in credit
The journal
is. . .
Account receivable
Sales
Cost of good sold
Merchandise inventory
500.000
350.000
500.000
350.000
Salestransaction
Perpetual Method
Merchandise Inventory
Using the transaction above***
Physical/Periodical Method
Purchases
Cash in bank
1000.000
1000.000
Purchasestransaction
Merchandise Inventory
Physical/Periodical Method
Account receivable
Sales
500.000
500.000
Salestransaction
Merchandise Inventory
Physical/Periodical Method
IS IT NEEDED TO MAKE ADJUSTMENT IN
PERIODICAL METHOD?
YES!!!!!BECAUSE IT’S NEEDED TO UPDATE THE INVENTORY
ACCOUNT AND CALCULATE COST OF GOOD SOLD
Merchandise Inventory
THE LAST TRANSACTION IS
ADJUSTED HERE***
Physical/Periodical Method
Merchandise inventory
Income summary
Income summary
Merch. inventory
750.000
400.000
750.000
400.000
NOTE :First inventory 400.000Last inventory 400.000+700.000-350.000=750.000
Merchandise Inventory
PERPETUAL SYSTEM
INVENTORY CAN CALCULATE BASED ON:
LAST IN FIRST OUT(LIFO)
METHOD
MOVING AVERAGEMETHOD
FIRST IN FIRST OUT(FIFO)
METHOD
Merchandise Inventory
EXAMPLE OF TRANSACTION
Along January 2009 X company sell 700 units
inventory with selling price Rp.4.500,00 by these following transaction
Merchandise Inventory
January 1st inventory at the beginning 600 unitsJanuary 10th buy 200 units @ Rp.4.700,00January 15th sold 400 unitsJanuary 28th 300 units
Merchandise Inventory
Inventory CardFIFO method
DATE PURCHASE SELLING BALANCE
Unit Price/unit
Total Unit Price/unit
Total Unit Price/unit
Total
January 1st 600 4500 2700000
January 10th 200 4700 940000 600 4500 2700000
200 4700 940000
January 15th 400 4500 1800000 200 4500 900000
200 4700 940000
January 28th 200 4500 900000 - - -
100 4700 940000 100 4700 470000
Merchandise Inventory
Inventory CardLIFO method
DATE PURCHASE SELLING BALANCE
Unit Price/unit
Total Unit Price/unit
Total Unit Price/unit
Total
January 1st 600 4500 2700000
January 10th 200 4700 940000 200 4700 940000
600 4500 2700000
January 15th 200 4700 940000 400 4500 180000
200 4500 2700000 100 4500 450000
January 28th 300 4500 1350000 - - -
Merchandise Inventory
Inventory CardAverage Moving Method
DATE PURCHASE SELLING BALANCE
Unit Price/unit
Total Unit Price/unit
Total Unit Price/unit
Total
January 1st 600 4500 2700000
January 10th 200 4700 940000 800 4550 3640000
January 15th 400 4550 1820000 400 4550 1820000
January 28th 300 4550 1365000 - - -
Merchandise Inventory
Average Moving method
WHERE THE LAST PRICE IN THE BALANCE COLUMN GET
FROM? TOTAL FIRST PRICE
TOTAL LAST PURCHASE
TOTAL
TOTAL UNITS = 600+200
THE PRICE USED IS
3640000 = Rp.4.550,00
800
2700000
940000
3640000
800 UNITS
Merchandise Inventory
PHYSICAL METHOD DIVIDE THE VALUATION BY THESE METHOD
1.FIRST IN FIRST OUT (FIFO) METHOD
2.LAST IN FIRST OUT (LIFO) METHOD
Merchandise Inventory
EXAMPLE OF TRANSACTION
January 1st 2009 total inventory of an item is 200 @ Rp.2.500,00January 10th buy the addition for inventory 400 units @ Rp.3.000,00January 25th buy again 300 units @ Rp.3.500,00
Merchandise Inventory
HOW IF WE WANT TO MAKE VALUATION WITH FIFO
METHOD?
Merchandise Inventory
January 1st January 10th
January 25th
Balance
Purchases
Purchases
200
400
300
800
@
@
@
2500
3000
3500
units
=
=
=
500000
1200000
1050000
VALUATION
Merchandise Inventory
FOR EXAMPLE : INVENTORY
INFORMATION GOT FROM
CALCULATION AT THE ENDING OF
PERIOD SAID THAT THERE ARE 500 UNITS AS THE
REMAINS
It means the items had sold are 400
items
Merchandise Inventory
January 10th
January 25th
Purchases
Purchases
Total inventory at the end of period
100
300
400
@
@
3000
3500
Units
=
=
300000
1050000
1350000
Remember!!!The oldest
inventory is sold first...
THE CALCULATION
OF MERCHANDISE INVENTORY AT
THE END OF PERIOD
THE CALCULATION
OF MERCHANDISE INVENTORY AT
THE END OF PERIOD
Merchandise Inventory
HOW IF USING THE SECOND METHOD
(LIFO)????
Merchandise Inventory
January 25th
January 10th
Purchases
Purchases
Total inventory at the end of period
300
100
400
@
@
3500
3000
Units
=
=
1050000
300000
1350000
THANK YOU FOR YOUR
ATTENTION!
SEE YOU NEXT TIME