Académique Documents
Professionnel Documents
Culture Documents
5- 2
C1
5- 3
C2
5- 4
C2
Inventory Systems
5- 5
C2
Inventory Systems
Perpetual systems
continually update
accounting records for
merchandising
transactions
Periodic systems
accounting records
relating to merchandise
transactions are updated
only at the end of the
accounting period
5- 6
P1
Trade Discounts
Used by manufacturers and wholesalers to
offer better prices for greater quantities
purchased.
Example
Z-Mart offers a 30% trade
discount for orders of 1,000
units or more on its popular
product Racer. Each
Racer has a list price of $5.25.
Quantity sold
Price per unit
Total
Less 30% discount
Invoice price
1,000
$ 5.25
5,250
(1,575)
$ 3,675
5- 7
P1
5- 8
P1
Purchase Discounts
A deduction from the invoice price granted
to induce early payment of the amount due.
5- 9
Purchase Discounts
P1
2/10,n/30
Discount
Percent
Number of
Days
Discount Is
Available
Otherwise,
Net (or All)
Is Due in 30
Days
Credit
Period
P1
Purchase Allowance . . .
A reduction in the cost of defective or
unacceptable merchandise received by a
purchaser from a supplier.
5- 10
5- 11
P1
5- 12
P1
P2
5- 13
5- 14
P2
Sales of Merchandise
Each sales transaction for a seller of
merchandise involves two parts:
Revenue received in
the form of an asset
from a customer.
Recognition of the
cost of merchandise
sold to a customer.
5- 15
P2
Sales Discounts
5- 16
P2
Sales allowances
refer to reductions in
the selling price of
merchandise sold to
customers.
5- 17
P2
5- 18
P3
5- 19
P4
A multiple-step
income
statement
format shows
detailed
computations
of net sales
and other
costs and
expenses, and
reports
subtotals for
various
classes of
items.
5- 20
P4
5- 21
Highly
Liquid
Less
Liquid
5- 22
End of Chapter 5