CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 6-3 Estimating the Inventory.

Slides:

Advertisements

Similar presentations

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 11-4 Posting Special Journal Totals to a General Ledger.

Advertisements

Estimating Ending Inventory Chapter 6 Section 3. ESTIMATED MERCHANDISE INVENTORY SHEET OPEN TEXTBOOKS PAGE 183 OPEN WORKBOOKS PAGE 255.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 6-1 The Nature of Merchandise Inventory Flow of inventory costs Effects of errors in.

How to Read, Analyze, and Interpret Financial Reports

Rate Earned on Average Total Assets n (January 1 Total assets + December 31 Total Assets) / 2 = Average Total Assets n Net Income after Federal Income.

Financial Statement Analysis

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 17-2 Calculating Earnings Performance and Efficiency Analysis.

Calculating Financial Ratios. Lesson Goals: Learn ratio analysis Calculate key ratios Calculating Financial Ratios.

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 7-1 Preparing an Income Statement Component Percentages.

LESSON 15-1 Preparing an Income Statement Mr. Hunter

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 13-2 Financial Statements and Analysis.

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 6-2 Inventory Costing.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 6-2 Inventory Costing FIFO inventory costing method LIFO inventory costing method Weighted-average.

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 6-1 The Nature of Merchandise Inventory.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 13-2 Financial Statements and Analysis.

Different Comparisons Financial performance analysis allows us to make several comparisons Year-to-Year. – Use Horizontal Analysis vs. a Competing Company.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 13-1 Work Sheet for a Corporation.

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 15-3 Decisions That Affect Net Income.

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 15-1 Cost Characteristics That Influence Decisions.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 6-3 Estimating the Inventory Gross profit method of estimating inventory Retail method.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 17-2 Calculating Earnings Performance and Efficiency Analysis.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 15-1 Cost Characteristics That Influence Decisions.

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 15-3 Decisions That Affect Net Income.

Ratios and Accounting A 1 to 1 training course (get it!)

CENTURY 21 ACCOUNTING © Thomson/South-Western CHAPTER 10 Journalizing Sales And Cash Receipts Using Special Journals Terms-see page 268.

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 6-1 The Nature of Merchandise Inventory.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 6-1 The Nature of Merchandise Inventory.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 6-1 The Nature of Merchandise Inventory Flow of inventory costs Effects of errors in.

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 4-2 Interim Departmental Statement of Gross Profit Modified by D. Burns West Johnston High School.

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 4-4 Responsibility Statements for a Merchandising Business.

Learning Objectives Understand the Business – LO1 Describe the issues in managing different types of inventory. Study the accounting methods – LO2 Explain.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 19-2 Determining the Cost of Merchandise Inventory.

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 8-2 Recording Closing Entries.

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 14-2 Budgeted Income Statement.

LESSON 15-1 Preparing an Income Statement

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 4-2 Posting Separate Amounts from a Journal to a General Ledger.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 16-1 Business Decisions Using Present Values.

Demonstration Problems Chapter 6 Merchandise Inventory 6-1 © 2016 Pearson Education, Inc.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 14-2 Budgeted Income Statement.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 7-3 Accounts Receivable Turnover Ratio.

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 6-3 Extending Financial Statement Information on a Work Sheet Calculate Net Income/Loss.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 15-1 Preparing an Income Statement.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 15-1 Preparing an Income Statement  Uses of financial statements  Income statement.

CHAPTER 15 FINANCIAL STATEMENTS FOR A CORPORATION

RATIO ANALYSIS Unit 4A Partners. Ratio Analysis indicate how well an organisation did show trends in performance over time make comparisons with similar.

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 2-3 Analyzing How Transactions Affect Owner’s Equity Accounts.

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 19-2 Determining the Cost of Merchandise Inventory.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4-2 Interim Departmental Statement of Gross Profit.

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 4-2 Interim Departmental Statement of Gross Profit.

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 14-6 Calculating Federal Income Tax and Completing a Work Sheet.

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 4-3 Posting Column Totals from a Journal to a General Ledger.

Prepared by Johnny Howard © 2015 South-Western, a part of Cengage Learning.

© 2015 Cengage Learning. All Rights Reserved. Learning Objectives © 2015 Cengage Learning. All Rights Reserved. LO3Perform efficiency analysis of a business.

Lifo Periodic 200 $9 Jan. 1 Beginning Inventory 300 $10

How to Read, Analyze, and Interpret Financial Reports

LESSON 19-2 Determining the Cost of Merchandise Inventory

How to Read, Analyze, and Interpret Financial Reports

LESSON 7-3 Accounts Receivable Turnover Ratio

© 2015 Cengage Learning. All Rights Reserved.

LESSON 15-1 Preparing an Income Statement

CALCULATING THE ACCOUNTS RECEIVABLE TURNOVER RATIO

LESSON 7-3 Accounts Receivable Turnover Ratio

LESSON 6-3 Estimating the Inventory

ESTIMATING ENDING MERCHANDISE INVENTORY

LESSON 4-2 Interim Departmental Statement of Gross Profit

Accounting for Inventory

Accounting for Inventory

How to Read, Analyze, and Interpret Financial Reports

GROSS PROFIT METHOD OF ESTIMATING INVENTORY

LESSON 15-1 Preparing an Income Statement

Presentation transcript:

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 6-3 Estimating the Inventory

CENTURY 21 ACCOUNTING © Thomson/South-Western MERCHANDISE INVENTORY TURNOVER The more rapidly a business sells merchandise, the more chance it has to make a satisfactory net income Two measures of the speed with which merchandise inventory is sold are: Merchandise inventory turnover ration Average number of days sales in merchandise inventory 2 LESSON 6-3

CENTURY 21 ACCOUNTING © Thomson/South-Western MERCHANDISE INVENTORY TURNOVER The number of times the average amount of merchandise inventory is sold during a specific period of time is called the merchandise inventory turnover ratio A merchandise inventory turnover ratio expresses a relationship between an average inventory & the cost of merchandise sold A low merchandise inventory turnover ratio usually indicates a low return on investment 3 LESSON 6-3

CENTURY 21 ACCOUNTING © Thomson/South-Western 4 LESSON 6-3 Average Merchandise Inventory =2÷ December 31 Merchandise Inventory + January 1 Merchandise Inventory $925, $170,845.00=5.4 times Cost of Merchandise Sold + Average Merchandise Inventory = Merchandise Inventory Turnover Ratio MERCHANDISE INVENTORY TURNOVER ($168, $173,325.00)÷2=$170, page 184 A 5.4 merchandise inventory turnover ratio means that the business sold the average merchandise inventory 5.4 times during the current year

CENTURY 21 ACCOUNTING © Thomson/South-Western 5 LESSON 6-3 AVERAGE NUMBER OF DAYS’ SALES IN MERCHANDISE INVENTORY Average Number of Days’ Sales in Merchandise Inventory = Merchandise Inventory Turnover Ratio ÷Days in Year 365÷5.4=68 days page 184  The period of time needed to sell an average amount of merchandise inventory is called the average number of days’ sales in merchandise inventory  The average number of days’ sales in merchandise inventory based on a 5.4 merchandise inventory turnover ration is calculated above  The average number of days’ sales in merchandise inventory is rounded to the nearest day.  This provides managers with adequate information to make sound business decisions regarding inventory

CENTURY 21 ACCOUNTING © Thomson/South-Western 6 LESSON 6-3 TERMS REVIEW merchandise inventory turnover ratio average number of days’ sales in merchandise inventory page 185