Chapter 14: Inventory & Services Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

2 of 14 Inventory & Services Merchandise inventory includes all goods owned by the business and held for sale. For tracking merchandise inventory, Nancy’s Service Merchandise uses Account No , Merchandise Inventory. Sage 50 uses a perpetual inventory system. In a perpetual inventory system, a merchandising business updates inventory each time an item is purchased or sold. Inventory calculations include FIFO (first in, first out), LIFO (last in, first out), and average cost methods.

3 of 14 Sage 50 Tips Sage 50 Tips Chapters 12 and 13 must be completed before starting Chapter 14. In Chapters 12 through 15, Sage 50 uses the average inventory method.

4 of 14 Backups and Saved Files, pp Backup (.ptb extension) Excel (.xlsx) and Adobe (.pdf) KBPageNos. Chapter 14 Begin.ptb 1,067 KB 520 Chapter 14.ptb 1,001 KB 533 Chapter 14_CL_VL_CGSJ_IAJ_IPR_GLTB.xlsx 32 KB 533 Exercise 14-1.ptb 1,001 KB 535 Exercise 14-2_CRJ_PJ_CGSJ_IAJ_IPR_GLTB.xlsx 32 KB 536 Exercise 14-2_Cash Receipts Journal.pdf 51 KB 536 Exercise 14-2_Purchase Journal.pdf 50 KB 536 Exercise 14-2_Cost of Goods Sold Journal.pdf 98 KB 536 Exercise 14-2_Inventory Adjustment Journal.pdf 50 KB 536 Exercise 14-2_Inventory Profitability Report.pdf 52 KB 536 Exercise 14-2_General Ledger Trial Balance.pdf 51 KB 536

5 of 14 Glossary of Terms Chapter 14

6 of 14 Merchandise inventory, p. 511 Merchandise inventory includes all goods owned by the business and held for resale. The inventory account for Nancy’s Service Merchandise is Account No , Merchandise Inventory.

7 of 14 Merchandising business, p. 511 Retail stores that resell goods and/or perform services.

8 of 14 FIFO, p. 511 The FIFO (first in, first out) inventory method assumes that the items in the beginning inventory are sold first.

9 of 14 LIFO, p. 511 The LIFO (last in, first out) inventory method assumes that the goods received last are sold first.

Inventory Adjustment, p. 522 In Chapter 14, you enter an inventory adjustment for damaged merchandise. 10 of 14

Online Learning Center  Go online to for additional resources. Link to Student Edition, select Chapter o Interactive Testing o Glossary of Terms o Feature Quiz o Narrated PowerPoints o Assessment Rubric o Going to the Net o QA Templates 11 of 14

12 of14 Going to the Net Access the BizMove.com website at Scroll down the window to Merchandise Inventories: Perpetual Inventory. Answer these questions about perpetual inventory What is a perpetual inventory at retail? 2. When is a physical count of inventory necessary?

Analysis Question Which one of Nancy’s Service Merchandise items shows the highest gross profit percentage? Why? 13 of 14

Assessment Rubric 14 of 14 DateTransaction Navigation Center/Module Task Window Journal Dr./Cr. 1/30Two tool kits purchased from Curt Perkins Tools on 1/28 were damaged by the owner. 1/31Cash sales in the amount of $4,752, ($4,400 plus $352 sales taxes) were deposited at Southeast Bank: 20 tool kits, $1,700; 18 hardware sets, 2,700.