Accounting 3 Chapter 22 Section 2. Determining the Cost of Merchandise Inventory Costs are not recorded on inventory records at the time a periodic inventory.

Slides:

Advertisements

Similar presentations

Accounting 3 Chapter 22 Section 3. Estimating Inventory- Gross Profit Method Gross Profit Method -Estimating inventory by using the previous year’s percentage.

Advertisements

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

Chapter 18 Inventory and Overhead McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved.

Prepared by Charlie Cook The University of West Alabama © 2009 South-Western, a part of Cengage Learning Inventory and Turnover: Assignments Chapter 17.

Accounting for Merchandise Inventory Chapter 6 Perpetual systems maintain a running record to show the inventory on hand at all times. Periodic systems.

Business Math, Eighth Edition Cleaves/Hobbs © 2009 Pearson Education, Inc. Upper Saddle River, NJ All Rights Reserved 17.1 Inventory Use the following.

Sample Problem Problem 17-2A The following data pertains to Good Investment Accounting software packages in the inventory of Computer Bonanza Outlets.

Accounting 3 Chapter 21 Section 3. Preparing Plant Asset Records A separate record is kept for each plant asset. This is called a Plant Asset Record.

7e Contemporary Mathematics FOR BUSINESS AND CONSUMERS Brechner PowerPoint Presentation by Domenic Tavella, MBA Inventory ©2014 Cengage Learning. All Rights.

Accounting for Merchandise Inventory

Reporting & Analyzing Inventory Chapter 5. Determining Inventory Items  Merchandise inventory includes all goods that a company owns and holds for sale.

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 © 2009 South-Western, Cengage Learning LESSON 19-1 Determining the Quantity of Merchandise Inventory.

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

Inventory Costing using FIFO, LIFO and AVERAGE Costing Methods 5-1 Calculate the following: CGS, Gross Profit and Ending Inventory under FIFO, LIFO and.

Chapter 18 Inventory and Overhead McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.

Chapter 9 Inventory (stock) valuation. Inventory (stock) valuation A good estimate of closing stock is provided by three methods of stock valuation: First-In-First-Out.

© 2014 Cengage Learning. All Rights Reserved. Learning Objectives © 2014 Cengage Learning. All Rights Reserved. LO2 Calculate the cost of merchandise inventory.

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

Chapter 22: Accounting for Inventory By: Audrey Marshall.

Accounting 3 Chapter 19 Section 1. Sales Journal This journal is used only to record sales of merchandise on account. This journal is used only to record.

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

Periodic Inventory Required Reading Chapter 11. Periodic Inventory One of the two major ways of accounting for inventory In periodic inventory, the cost.

Inventories – Part II Chapter 8 1. Using FIFO, the earliest batch purchased is considered the first batch of merchandise sold. The physical flow does.

Accounting Practices 501 Chapter 6 Inventory costing methods (WAC) Cathy Saenger, Senior Lecturer, Eastern Institute of Technology © Pearson 2011.

CHAPTER 19 ACCOUNTING FOR INVENTORY DETERMINING MERCHANDISE INVENTORY The largest asset of a merchandising business is Merchandise Inventory.

First In, First Out Inventory (FIFO) Using the price of merchandise purchased first to calculate the cost merchandise sold first. Last In, First Out Inventory.

Section 2Determining the Cost of Inventories What You’ll Learn  How to determine the cost of the merchandise on hand.  How to use the four inventory.

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

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater Accounting for Merchandise Inventory Chapter 15.

Chapter 22 Accounting for Inventory. Determining the Quantity of Merchandise Inventory Two methods used to determine the quantity of each item of merchandise.

Inventories ACG 2021: Chapter 6 Created by: M. Mari Fall 2007.

Inventory Management 1 Lecture 3 Dr. Mahmoud Arafa Agric. Economic Dep.

Chapter 6 Inventories Lecture 27. Lecture Overview.

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

BUA111 Chp. 6: Inventory Dr. K. Moon.

BUA111 Chp. 7: Inventory Dr. K. Moon.

Inventory and Overhead

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

Inventory and Overhead

FIFO Perpetual Inventory Account

7 Inventories Student Version.

Exercise – On October 26th, Sell 324 Units for $30 each

LESSON 19-2 Determining the Cost of Merchandise Inventory

LESSON 19-2 Determining the Cost of Merchandise Inventory

LESSON 19-1 Determining the Quantity of Merchandise Inventory

LESSON 19-1 Determining the Quantity of Merchandise Inventory

Accounting for Inventories

Inventory of Wholesalers and Retailers

Valuation of Inventory

Inventories and cost of goods sold

Accounting 30 Chapter 20 Final Jeopardy Topic 1 Topic 2 Topic 3

INVENTORIES AND THE COST OF GOODS SOLD

© 2014 Cengage Learning. All Rights Reserved.

© 2015 Cengage Learning. All Rights Reserved.

FIRST-IN, FIRST-OUT INVENTORY COSTING METHOD

Two methods of tracking merchandise are the perpetual inventory system and the periodic inventory system. Businesses can choose one of four methods.

Welcome Back Atef Abuelaish.

Two methods of tracking merchandise are the perpetual inventory system and the periodic inventory system. Businesses can choose one of four methods.

© 2009 Cengage Learning. All rights reserved.

Accounting for Inventory

Determining the Quantity of Merchandise Inventory

Business Math Chapter 17: Inventory.

Accounting for Inventory

CHAPTER NINETEEN APPENDIX

Chapter 19 Terms Review Start slide show.

CHAPTER NINETEEN APPENDIX

Example Exercise 1 Inventory Cost Flow Assumptions

Inventory Costing Methods

Presentation transcript:

Accounting 3 Chapter 22 Section 2

Determining the Cost of Merchandise Inventory Costs are not recorded on inventory records at the time a periodic inventory is taken. After the quantities of merchandise on hand are counted, purchase invoices are used to find merchandise unit prices and are then recorded on the inventory records. The total costs are then calculated using the quantities and unit prices recorded on the inventory records. Most businesses use one of three inventory costing methods: first-in-first-out; last-in-first-out; or weighted-average.

First-In-First Out Inventory Costing (FIFO) FIFO is when you use the price of (remaining) merchandise purchased first to calculate the cost of merchandise sold first. For example, on December 31 Winning Edge had 27 tennis rackets on hand. Nine of those rackets (purchased August 25) cost $27 each. Eighteen of those rackets (purchased Nov. 4) cost $28 each. In order to figure the ending cost of inventory, we take 9 rackets at $27 (total of $243.00) and 18 rackets at $28 (total of $504.00) to end up with an ending cost of inventory of $ *Look at p. 578 in your textbook for a chart of where this information is coming from.

Last-In-First-Out Inventory Costing (LIFO) LIFO is when you use the price of merchandise purchased last to calculate the cost of merchandise sold first. Using the same example: December 31 WE had 27 rackets on hand. To find ending cost of inventory: take 17 rackets at $23 each ($391) + 8 rackets at $25 each ($200) + 2 rackets at $26 each ($52) = $ ending inventory cost. *Look at p. 579 in your textbook for a chart of where this information comes from.

Weighted-Average Inventory Costing This is when you use the average cost of beginning inventory plus merchandise purchased during a fiscal period to calculate the cost of merchandise sold. First, you add all total costs and divide it by the total number of units purchased. Then, take the average unit price and multiply it by the number of units left on hand. This is the ending inventory cost.

Tips for calculating FIFO and LIFO Based on the book, this may be confusing. My tips for you are:  FIFO- Go from the bottom to the top of the chart until you have all units on hand accounted for.  LIFO- Go from the top to the bottom of the chart until you have all units on hand accounted for. I know this may not make sense, but go with it.

Calculating Cost of Merchandise Sold Cost of Merchandise Available for Sale – Ending Cost of Inventory = Cost of Merchandise Sold. Even though the formula stays the same no matter which method of inventory costing you use, the answer will not be the same.

Work Together p. 582 next three slides, Assignment on last slide Purchase Dates Units Purchased Unit Price Total Cost FIFO Units on Hand FIFO Cost Totals Jan 1, Beg. Inv.14$30.00$ Mar 3, purchases Jul 13, purchases Aug 15, purchases Oct 22, purchases $1,678.00

Purchase Dates Units Purchased Unit Price Total Cost LIFO Units on Hand LIFO Cost Totals Jan 1, Beg. Inv.14$30.00$ Mar 3, purchases Jul 13, purchases Aug 15, purchases Oct 22, purchases $1, $ $484.00

Purchases Total Date Units Unit Price Cost Totals Weighted Average Jan 1, Beg. Inv.14$30.00$ Mar 3, Purch Jul 13, Purch Aug 15, Purch Oct 22, Purch , (TC)1, / (#U) 50 = (WA/U) $33.56 (UOH) 16 x (WA/U) = $ ending inventory cost

Assignment Do Application 22-2 by hand. Turn it into Mrs. Middleton. Move on to Section 3.