Chapter 13: Merchandise Inventory

©The McGraw-Hill Companies, Inc., of 26 Merchandise Inventory Merchandise inventory includes all goods owned by the business and held for sale. The account used for Jessica's Sales & Service’s merchandise inventory is Account No , Merchandise Inventory. Peachtree uses a perpetual inventory system. Inventory calculations include FIFO (first in, first out), LIFO (last in, first out), and average cost methods. Peachtree tracks the inventory items you buy and sell. After you post, Peachtree automatically updates the cost and quantity of each inventory item.

©The McGraw-Hill Companies, Inc., of 26 Software Objectives, p Enter inventory maintenance and default information. 2. Enter inventory item information, including Sales account, Merchandise Inventory account, and Cost of Sales account. 3. Enter item codes when recording purchases and sales. 4. Enter inventory adjustments.. 5. Make three backups: 2 for Jessica's Sales & Service; 1 for the end-of-chapter exercise.

©The McGraw-Hill Companies, Inc., of 26 Web Objectives, p Use your Internet browser to go to the book’s website at Go to the Internet Activity link on the book’s website. Then, select WEB EXERCISES PART 3. Complete the fourth web exercise in Part 3, “Accountant’s World.” 3. Use a word processing program to write summaries of the websites that you visited.

©The McGraw-Hill Companies, Inc., of 26 The journal entry for purchasing four pairs of curtains from Rene Burton Fabrics at $30 each, p. 481 Account ID Account Description DebitCredit Merchandise Inventory /RBF08 Accounts Payable/ Rene Burton Fabrics

©The McGraw-Hill Companies, Inc., of 26 The journal entry for selling three pairs of curtains to Phil Merchon at $100 each, p. 481 Account ID Account Description DebitCredit Cost of Goods Sold- Wall /pm005 Accounts Receivable/ Phil Merchon Merchandise Inventory Sales-Wall Sales Tax Payable 24.00

©The McGraw-Hill Companies, Inc., of 26 Peachtree Tips Chapters 11 and 12 must be completed before starting Chapter 13. In Chapters 11-14, Peachtree uses the average inventory method.

©The McGraw-Hill Companies, Inc., of 26 Backing Up Chapter 13 Disk Backup Name KB Page Nos. 17 of 18 A:\Chapter 13 Begin 117 KB 489 A:\Chapter KB 504 A:\Exercise KB 508 TOTAL KB 351 KB.

©The McGraw-Hill Companies, Inc., of 26 Chapter 13 Topics 1. Software & web objectives, p Cost methods, p. 480 a. Average cost, pp b. LIFO (Last in, First Out), pp c. FIFO (First in, First Out), p Types of Inventory Items, pp Getting Started, pp Entering inventory item maintenance information, pp Inventory adjustments, pp Backing up your data, p. 489

©The McGraw-Hill Companies, Inc., of 26 Chapter 13 Topics, concluded 8. Additional Transactions, pp Printing Reports, pp Backing up Chapter 13 data, p Internet activity, p Summary and review, pp a. Going to the net, p. 506 b. Short-answer questions, pp b. Exercise 13-1, p. 508 c. Exercise 13-2, p. 509 d. Chapter 13 index, p. 510

©The McGraw-Hill Companies, Inc., of 26 Getting started, pp Complete steps 1 – 2i on pages 483 and 484. Click on Maintain, Default Information, then Inventory Items.

©The McGraw-Hill Companies, Inc., of 26 “Taxes/Shipping” tab, p. 484 Click on the “Taxes/Shipping” tab. Read the information on p Then, click on to close the window and return to the menu bar.

©The McGraw-Hill Companies, Inc., of 26 Entering inventory item maintenance information, pp Read the information on page 485. Then, complete steps 1 – 4 on pp

©The McGraw-Hill Companies, Inc., of 26 Inventory Adjustments, p. 487 Read the information on p Then, click on Tasks, Purchases/Receive Inventory. Record the January 14, 2003, transaction. Post and close the “Purchases/Receive Inventory” window.

©The McGraw-Hill Companies, Inc., of 26 Inventory Adjustments, pp Read the transaction on p Then, complete steps 1-6 on page 488. Complete step 7 on p Click on the “Sales Defaults” folder tab.

©The McGraw-Hill Companies, Inc., of 26 Backing up your data, p. 489 Complete steps 1 – 9 on page 489 to back up your data. Use Chapter 13 Begin as the back up name.

©The McGraw-Hill Companies, Inc., of 26 Additional Transactions, pp Complete the transactions on pages 490– 496. Compare your printouts with the ones shown on pages Complete the January 31, 2003 transaction on p. 496.

©The McGraw-Hill Companies, Inc., of 26 Printing reports, pp Complete steps 1–8 on pages 496–503. Compare your reports with the ones shown on pages

©The McGraw-Hill Companies, Inc., of 26 Backing Up Chapter 13 Data, p. 504 Complete steps on page 504. The back up name is Chapter 13. Click on. Compare your check to the one shown on p Record the additional payments shown on p. 382.

©The McGraw-Hill Companies, Inc., of 26 Glossary of Terms Chapter 13

©The McGraw-Hill Companies, Inc., of 26 Merchandise inventory, p. 479 Merchandise inventory includes all goods owned by the business and held for sale. The account used for Jessica's Sales & Service’s merchandise inventory is Account No , Merchandise Inventory.

©The McGraw-Hill Companies, Inc., of 26 Merchandising business, p. 479 Retail stores that resell goods and/or perform services.

©The McGraw-Hill Companies, Inc., of 26 FIFO, p. 479 The FIFO (first in, first out) inventory method assumes that the items in the beginning inventory are sold first.

©The McGraw-Hill Companies, Inc., of 26 LIFO, p. 479 The LIFO (last in, first out) inventory method assumes that the goods received last are sold first.

©The McGraw-Hill Companies, Inc., of 26 Internet Activity, p Go to the book’s website at In the “Student Center” list, link to Internet Activities. 3 Link to WEB EXERCISES PART 3. 4 Complete the “ACCOUNTANT’S WORLD” exercise. Read steps 1 and 2. 5 Follow the steps shown on the book’s website to complete this Internet activity. 6 Using a word processing program, write a brief summary of what you find. Include all appropriate website addresses.

©The McGraw-Hill Companies, Inc., of 26 Going to the Net, p. 506 Access the Small Business Knowledge Base website at Scroll down the screen to “Merchandise Inventories: Perpetual Inventory.” 1. What is a perpetual inventory at retail? 2. When is a physical count of inventory necessary?