1. สินค้าคงเหลือ
(Merchandise Inventories)
Chapter 8 2

2. INCOME MEASUREMENT MERCHANDISER
Less
Sales
Revenue
Equals
Cost of
Goods Sold
Gross
Profit
Less
Equals
Net
Income
(Loss)
Operating
Expenses

3. OPERATING CYCLE COMPARISON Merchandising Company
Service Company
Receive Cash
Cash
Perform Services
Accounts
Receivable
Merchandising Company
Receive Cash
Buy Inventory
Cash
Sell Inventory
Merchandise
Inventory
Accounts
Receivable

4. รายการที่เกี่ยวข้องกับการซื้อ/ขายสินค้า
รายได้จากการขาย(Sales)
ส่วนลดการค้า (Trade Discount)
รับคืน(ส่งคืน)และส่วนลดที่ยอมให้ (Sales Returns and Allowance)
ส่วนลดเงินสด (Cash Discount)
ค่าขนส่งสินค้า (Transportation Costs)
ต้นทุนของสินค้า

5. รายการที่เกี่ยวข้องกับการซื้อ/ขายสินค้า
ด้านผู้ซื้อ
ด้านผู้ขาย
ส่งคืนและส่วนลด
รับคืนและส่วนลด
ส่วนลดรับ
ส่วนลดจ่าย
ค่าขนส่งเข้า/เมื่อซื้อ
ค่าขนส่งออก/เมื่อขาย

6. INVENTORY SYSTEMS SOLD SOLD
PERPETUAL INVENTORY
End of period
No entry
Inventory purchased
Item sold
SOLD
Record purchase
Record revenue & COGS
PERIODIC INVENTORY
Inventory purchased
Item sold
End of period
Compute
and record
COGS
SOLD
Record purchase
Record revenue only

7. PURCHASE ENTRIES – PERPETUAL INVENTORY
MERCHANDISE INVENTORY
CASH
Cash
purchase
COST
COST
A/P
Credit
purchase
MERCHANDISE INVENTORY
COST
COST
The purchase is normally recorded when the goods are received
Credit purchases are normally supported by a purchase invoice

8. PURCHASE ENTRIES – PERPETUAL INVENTORY
3800
Cash
purchase
3800
3 800
Credit
purchase

9. PURCHASE RETURNS AND ALLOWANCES
GENERAL JOURNAL
Date
Account Titles and Explanation
Dr.
Cr.
May 8
Accounts Payable
300
Merchandise Inventory
(To record return of inoperable
goods received from Highpoint
Electronic, DM No. 126)
For purchases returns and allowances, Accounts Payable is debited and Merchandise Inventory is credited.
Buyer
Seller

10. PURCHASE DISCOUNTS PAYMENT WITHIN DISCOUNT PERIOD
Credit terms may permit the buyer to claim a cash discount
for the prompt payment of a balance due.
GENERAL JOURNAL
Date
Account Titles and Explanation
Dr.
Cr.
3,500
3,430 70
May 14
Accounts Payable
Cash
Merchandise Inventory
(To record payment within
discount period)
If payment is made within the discount period,
Merchandise inventory is credited for the discount taken.

11. PAYMENT AFTER DISCOUNT PERIOD
PURCHASE DISCOUNTS
PAYMENT AFTER DISCOUNT PERIOD
GENERAL JOURNAL
Date
Account Titles and Explanation
Debit
Credit
June 3
Accounts Payable
3,500
Cash
(To record payment with no
discount taken)
If payment is made after the discount period, Accounts Payable is debited and Cash is credited for the full amount.

12. SHIPPING TERMS – FREE ON BOARD
FOB SHIPPING POINT
FOB DESTINATION
Title transfers to buyer at sellers shipping dock
Buyer pays freight costs
Title transfers to buyer at buyers receiving dock
Seller pays freight costs

13. ACCOUNTING FOR FREIGHT COSTS PAID BY BUYER
GENERAL JOURNAL
Date
Account Titles and Explanation
Dr.
Cr.
150
May 6
Merchandise Inventory
Cash
(To record payment of freight,
terms FOB shipping point)
Freight costs are part of the cost of inventory purchased.

14. ACCOUNTING FOR FREIGHT COSTS PAID BY SELLER
GENERAL JOURNAL
Date
Account Titles and Explanation
Dr.
Cr.
150
May 4
Freight-out (Delivery Expense)
Cash
(To record payment of freight on
goods sold FOB destination)
Freight costs incurred by the seller are
selling expenses called Freight-out.

15. REVENUE ENTRIES – PERPETUAL INVENTORY
Revenues are reported when earned in
accordance with the revenue recognition principle.
In a merchandising company,
revenues are earned
when the goods are
transferred from seller to buyer.
All sales should be supported by a
cash register tape or sales invoice.

16. REVENUE ENTRIES – PERPETUAL INVENTORY
GENERAL JOURNAL
Date
Account Titles and Explanation
Dr.
Cr.
May 4
Accounts Receivable
3,800
2,400
Sales
(To record credit sales to Chelsea
Video per invoice #731)
Cost of Goods Sold
Merchandise Inventory
(To record cost of merchandise
sold on invoice #731 to Chelsea
Video)
For cash sales, simply replace the debit
to accounts receivable with a debit to cash.

17. SALES RETURNS & ALLOWANCES
Customer returns goods to the
seller for credit or a refund.
SALES ALLOWANCE
Seller allows a reduction in selling price.
Goods are not returned.
Seller prepares a CREDIT MEMORANDUM.

18. RECORDING SALES RETURNS & ALLOWANCES
GENERAL JOURNAL
Date
Account Titles and Explanation
Dr.
Cr.
May 8
Sales Returns and Allowances
Accounts Receivable
(To record
credit granted to
Beyer
Video,
for returned goods)
Merchandise Inventory
Cost of Goods Sold
300
140
(To record cost of goods returned )
Sales Returns and Allowances is a CONTRA-REVENUE account.
It’s normal balance is a DEBIT.

19. SALES DISCOUNTS Seller offers customer a cash discount
for prompt payment of balance due.
Credit terms indicate the discount percent,
Discount period, and final due date.
2/10, n/ A 2% discount may be taken if payment is made
within 10 days of the invoice date.
1/10 EOM A 1% discount is available if payment is made
by the 10th of the next month.

20. RECORDING SALES DISCOUNTS
GENERAL JOURNAL
Date
Account Titles and Explanation
Dr.
Cr.
May 14
Cash
3,430 70
3,500
Sales Discounts
Accounts Receivable
(To record collection within 2/10,
n/30 discount period from Beyer
Video)
Sales discounts is a CONTRA-REVENUE ACCOUNT.
It’s normal balance is a DEBIT.

21. Computation of Net Sales
Sales revenues
Sales
$480,000
Less: Sales returns & allowances
$12,000
Sales Discounts
8,000
20,000
Net Sales
$460,000

22. MULTIPLE - STEP INCOME STATEMENT
The multiple step income statement arrives at net income in stages.
Sellers Electronix
Income Statement
Net Sales
$460,000
Less: Cost of Goods Sold
316,000
Gross Profit
$144,000
Operating Expenses
114,000
Net Income
$30,000
The multiple step income statement also distinguished between
operating and non-operating activities.

23. PERPETUAL &PERIODIC (ส่วนลดรับ) Transaction PERPETUAL PERIODIC
Purchase Price
Merchandise Inventory
Purchase (ซื้อ)
Returns & Allowances
Discounts
Freight-in
Purchase returns & allowances(ส่งคืนและส่วนลด)
Purchase discounts
(ส่วนลดรับ)
Freight-in(ค่าขนส่งเข้า)

24. PERPETUAL &PERIODIC ซื้อสินค้า เดบิต สินค้า เดบิต ซื้อ เครดิต เจ้าหนี้
เดบิต สินค้า
เดบิต ซื้อ
เครดิต เจ้าหนี้
ส่งคืนสินค้า
เดบิต เจ้าหนี้
เครดิต สินค้า
เครดิต ส่งคืนและส่วนลด
จ่ายค่าขนส่ง
เดบิต ค่าขนส่งเข้า
เครดิต เงินสด
ชำระหนี้ค่าสินค้าและ
เดบิต เจ้าหนี้
ได้รับส่วนลดเงินสด
สินค้า
ส่วนลดรับ

25. COST OF GOODS SOLD—PERIODIC INVENTORY
Sellers Electronix
Cost of Goods Sold
For the year ended December 31, 2006
Cost of Goods Sold
Inventory, January 1
$36,000
Purchases
$325,000
Less: Purchase returns & allowances
$10,400
Purchase discounts
6,800
17,200
Net purchases
307,800
Add: Freight-in
12,200
Cost of Goods Purchased
320,000
Cost of Goods Available for Sale
356,000
Inventory, December 31
40,000
316,000

26. DETERMINING INVENTORY QUANTITIES
At the balance sheet date, companies must determine
how many units are on hand, and value those units.
Two steps are required to achieve this:
1. Take a physical inventory count
2. Determine ownership of goods

27. INTERNAL CONTROLS FOR PHYSICAL INVENTORY
Proper internal control over inventory can be achieved
by the implementing the following procedures: 1
Count done by employees with no custodial responsibilities. 2
Counters establish authenticity of each item. 3
Second count by another employee. 4
Pre-numbered inventory tags and sequence checks. 5
Supervisory review.

28. DETERMINING OWNERSHIP OF GOODS IN TRANSIT
FOB Shipping Point FOB Destination Point
Seller
Seller
Ownership passes to the buyer here
Public
Carrier
Co.
Public
Carrier
Co.
Ownership passes to the buyer here
Buyer
Buyer

29. DETERMINING OWNERSHIP OF CONSIGNED GOODS
A consignment agreement transfers goods from a
consignor to a consignee, who agrees to sell the goods.
Consignor
ผู้ฝากขาย
Consignee
ผู้รับฝากขาย
Sale
Consignee remits proceeds (less fee) to consignor when inventory is sold. Inventory on consignment is included in the consignor’s inventory until sold.
Customer

30. INVENTORY COSTING – PERIODIC SYSTEM
Pool of Costs
Cost of Goods Available for Sale
Beginning inventory
$ 20,000
Cost of goods purchased
100,000
Cost of goods available for sale
$120,000
Step 1
Step 2
Ending Inventory
Cost of Goods Sold
Unit
Total
Cost of goods available for sale
$120,000
Units
Cost
Cost
Less: Ending inventory
15,000
5,000
$ 3.00
$15,000
Cost of goods sold
$105,000

31. การคำนวณต้นทุนของสินค้าคงเหลือ
1. วิธีราคาเจาะจง 2. วิธีเข้าก่อน-ออกก่อน 3. วิธีราคาทุนถัวเฉลี่ยถ่วงน้ำหนัก

32. SPECIFIC IDENTIFICATION
Tracks actual flow of goods. Each item marked with its unit cost.
Inventory
Purchases
Cost of Goods Sold
$1,500
Item 1
$700
SOLD
Item #2
$750 1
Item #3
$800
SOLD

33. ASSUMED COST FLOW METHODS
These methods assume cost flows that may be
unrelated to the actual physical flow of goods.
FIFO
LIFO
AVERAGE
COST
These cost flow assumptions do not have to be
consistent with the actual flow of goods.

34. FIFO FIRST-IN, FIRST-OUT
FIFO ASSUMPTIONS
Earliest goods purchased are the first to be sold.
Cost of earliest goods purchased are the first to be recognized as cost of goods sold.
Ending inventory consists of items purchased late in the year.

35. ALLOCATION OF COSTS FIFO METHOD
12,000
Step 1
Step 2
Ending Inventory
Cost of Goods Sold
Unit
Total
Date
Units
Cost
Cost
11/27
400
$ 13
$ 5,200
Cost of goods available for sale
$ 12,000
08/24 50 12
600
Less: Ending inventory
5,800
450
$5,800
Cost of goods sold
$6,200

36. COGS PROOF FIFO METHOD Unit Total Date Units Cost Cost 01/01 X = 04/15
The accuracy of the cost of goods sold can be verified by recognizing that the first units acquired are the first units sold.
Unit
Total
Date
Units
Cost
Cost
01/01
$ $ 1, , ,000
$ 6,200 X =
04/15 X =
08/24 X =
Total

37. AVERAGE COST ASSUMPTIONS
Goods available for sale are homogeneous.
Cost of goods available for sale is allocated on the basis of the weighted average unit cost incurred.
The weighted average unit cost is applied to the units on hand to determine the cost of ending inventory.

38. ALLOCATION OF COSTS AVERAGE COST
$ 12,000
$ 5, $ 6,600
Step 1
Step 2
Ending Inventory
Cost of Goods Sold
$ 12,000 ÷
1,000 =
$12.00
Unit
Total
Cost of goods available for sale
$ 12,000
Units
Cost
Cost
Less: Ending inventory
5,400
450 x
$ 12.00 =
Cost of goods sold

39. LOWER OF COST OR MARKET Market value = Replacement cost Market ValueIF
Cost
The inventory is written down to its market value.
When using LCM:
Market value = Replacement cost

40. LOWER OF COST OR MARKET VALUING INVENTORY AT Lower of Cost or Cost
Television sets
Consoles
$ 60,000
$ 55,000
$ 55,000
Portables
45,000
52,000
45,000
Total
105,000
107,000
Video equipment
Recorders
48,000
45,000
45,000
Movies
15,000
14,000
14,000
Total
63,000
59,000
Total inventory
$ 168,000
$ 166,000
$ 159,000

41. COST FLOWS—PERPETUAL INVENTORY
The product data shown below for Bow Valley Electronics will be used to explain perpetual inventory costing using three assumed cost flow methods:
FIFO
AVERAGE COST
Bow Valley Electronics
Z202 Astro Condensers
Unit
Total
Date
Explanation
Units
Cost
Cost
01/01
Beginning inventory
100
$10
$ 1,000
04/15
Purchase
200 11
2,200
08/24
Purchase
300 12
3,600
11/27
Purchase
400 13
5,200
Total
$ 12,000

42. PERPETUAL INVENTORY – FIFO
Under FIFO, the cost of the earliest goods on hand prior to each sale is charged to cost of goods sold. Therefore, the cost of goods sold on September 10 consists of the units on hand January 1 and the units purchased April 15 and August 24.
Date
Purchases
Sales
Balance
January 1
$10) $1,000
April 15
$11) $2,200
$10)
$11) $3,200
August 24
$12) $3,600
$10)
$11)
$12) $6,800
September 10
$10)
$11) $6,200
$12) $600
$12)
November 27
$13) $5,200
$12)
$13) $5,800

43. PERPETUAL INVENTORY – AVG COST
The average cost method in a perpetual inventory system is called the moving average method.
Under this method a new average is computed after each purchase.
The average cost is computed by dividing the cost of goods available for sale by the units on hand.
The average cost is then applied to:
Average Cost x Units Sold = COGS
Average Cost x Remaining Units = ENDING INVENTORY

44. PERPETUAL INVENTORY – AVG COST
A new average is computed each time a purchase is made.
On April 15, after 200 units are purchased for $2,200,
a total of 300 units costing $3,200 ($1,000 + $2,200) are on hand.
The average cost is $ ($3,200/300).
Date
Purchases
Sales
Balance
January 1
$10)
$1,000
April 15
$11) $2,200 )
$3,200
August 24
$12) $3,600 )
$6,800
September 10
11,333)
$6,233
$11.333)
$567
November 27
$13) $5,200 )
$5,767

45. INVENTORY DISCLOSURES
Inventory is classified as a current asset in the balance sheet.
COGS is subtracted from sales in the income statement.
Notes to financial statements should include:
Major inventory classes (if not on balance sheet)
Basis of accounting (Cost or LCM)
Costing Method (FIFO, LIFO, AVERAGE COST)

46. USE COST FLOW METHODS CONSISTENTLY
A company needs to use its chosen cost flow method consistently from one period to another.
Consistent application makes more comparable financial statements.
Changes in cost flow method should be disclosed in the financial statements.

47. End of Chapter 8 4