121 Introduction Welcome to the 2 nd half WebCT: >> OC Website <<OC Website – Course Outline Evaluation: Lyryx - 4% ASF - 6% Quizzes - 10% Term Work 20%

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Presentation transcript:

121 Introduction Welcome to the 2 nd half WebCT: >> OC Website <<OC Website – Course Outline Evaluation: Lyryx - 4% ASF - 6% Quizzes - 10% Term Work 20%

121 Intro, continued Course Schedule My Timetable Lyryx

Appendix 6A The Periodic Inventory System

Recording Transactions Cost of goods sold: Beginning inventory$ 3,000 Add: Purchases$10,000 Less: Purchase discounts$ 200 Purchase returns and allowances Net purchases9,500 Transportation-in 400 Cost of purchases 9,900 Cost of goods available for sale12,900 Less: Ending inventory 2,500 Cost of goods sold$10,400

Purchase Transactions The inventory account is not used to record day-to-day transactions Instead we use special accounts: – Purchases – Purchase Discounts – Purchase Returns and Allowances – Transportation-in Eg.s QS6, QS7 121Ch6PenNotes.xls121Ch6PenNotes.xls

Sales Transactions Again, the inventory account is not affected by day-to-day sales transactions Also, no COGS account is used Only the revenue side of sales transactions are recorded – not the cost side:

A sale is recorded as: Accts Receivable 10,000 Sales Revenue 10,000 Cost of Goods Sold 6,000 Merchandise Inventory 6,000 Eg.s: QS 6-9 & QS 6-10 ExcelNotes.xlsExcelNotes.xls

Cost of Goods Sold Since there is no Cost of Goods Sold account, how is cost of goods sold recognized? – It is computed at the end of the accounting period – COGS = BI + Purchases* - EI – Where Purchases* is the ‘cost of purchases’ and is computed as: Purchases – Pur Discounts – Pur Returns & All + Transportation-in; Eg. QS 6-18 Excel.xlsExcel.xls

Closing Entries These are just like regular closing entries except that you must remember to close all the new income statement accounts: – Purchases – Purchase Discounts – Purchase Returns and Allowances – Transportation-in (Close Sales accounts too) Eg. QS 6-19 >> Excel.xls <<Excel.xls

Worksheet & Income Statement Please study Page 288. The only weird thing is the placement of beginning and ending inventory. For the income statement, study P – Only difference is the cost of goods sold is now a calculation – not just a single line. – Eg. QS 6-20 >> Excel.xls <<Excel.xls