Enviar pesquisa
Carregar
Whbm08
•
1 gostou
•
814 visualizações
University of Dhaka
Seguir
Denunciar
Compartilhar
Denunciar
Compartilhar
1 de 64
Recomendados
Cost Accounting Chapter 8
Cost Accounting Chapter 8
Institute of Management Studies UOP
Example cost volume-profit (cvp) analysis
Example cost volume-profit (cvp) analysis
Malinga Perera
Osha Recordkeeping Highlights
Osha Recordkeeping Highlights
AlphaStaff
Lecture-4
Lecture-4
University of Dhaka
Healthcare Reform: The Road Ahead
Healthcare Reform: The Road Ahead
AlphaStaff
INCIDENCIA DEL GROOMING O ACOSO SEXUAL UTILIZANDO TICS
INCIDENCIA DEL GROOMING O ACOSO SEXUAL UTILIZANDO TICS
MagdaCasanova
Chapter 2 class power point
Chapter 2 class power point
cmurphysvhs
Conference Invitation
Conference Invitation
Ds Gs
Recomendados
Cost Accounting Chapter 8
Cost Accounting Chapter 8
Institute of Management Studies UOP
Example cost volume-profit (cvp) analysis
Example cost volume-profit (cvp) analysis
Malinga Perera
Osha Recordkeeping Highlights
Osha Recordkeeping Highlights
AlphaStaff
Lecture-4
Lecture-4
University of Dhaka
Healthcare Reform: The Road Ahead
Healthcare Reform: The Road Ahead
AlphaStaff
INCIDENCIA DEL GROOMING O ACOSO SEXUAL UTILIZANDO TICS
INCIDENCIA DEL GROOMING O ACOSO SEXUAL UTILIZANDO TICS
MagdaCasanova
Chapter 2 class power point
Chapter 2 class power point
cmurphysvhs
Conference Invitation
Conference Invitation
Ds Gs
New CA Laws and Regulations Compliance Overview
New CA Laws and Regulations Compliance Overview
AlphaStaff
Funtional level based on 4 major clusters
Funtional level based on 4 major clusters
Anuar Abdul Fattah
Year end process 2013
Year end process 2013
AlphaStaff
Product marketing org structure + interlocks
Product marketing org structure + interlocks
Travis Wilkins
Job description rn supervisor
Job description rn supervisor
Mastercare ClearLake Houston
Managing Performance Using Job Descriptions
Managing Performance Using Job Descriptions
AlphaStaff
Function rank job description template
Function rank job description template
Anuar Abdul Fattah
Developing Effective Job Descriptions -10/09
Developing Effective Job Descriptions -10/09
Dean Isaacs
Ch06
Ch06
muditcool
Divisional structure
Divisional structure
Nikita Agrawal
Sales supervisor job description
Sales supervisor job description
salesmanagement
organization charts....rules
organization charts....rules
Ahmed Al-Senosy Ph.D(cand),MSc,PMP,RMP
Organizational Structure
Organizational Structure
Mazhar Iftikhar (mazhariftikhar@gmail.com)
Job description
Job description
pedroazevedosantos
Divisional structures
Divisional structures
Tharujossy
Best Practices In Job Description Design and Management
Best Practices In Job Description Design and Management
HRTMS
How To Write A Job Description In 5 Steps
How To Write A Job Description In 5 Steps
Fit Small Business
Whbm08
Whbm08
Shakeel Ahmed
Whbm08
Whbm08
PMAS UIIT Rawalpindi
Whbm06 140301020106-phpapp01
Whbm06 140301020106-phpapp01
international islamic university islamabad
Whbm06
Whbm06
Zakir Abbas
Whbm06
Whbm06
Shakeel Ahmed
Mais conteúdo relacionado
Destaque
New CA Laws and Regulations Compliance Overview
New CA Laws and Regulations Compliance Overview
AlphaStaff
Funtional level based on 4 major clusters
Funtional level based on 4 major clusters
Anuar Abdul Fattah
Year end process 2013
Year end process 2013
AlphaStaff
Product marketing org structure + interlocks
Product marketing org structure + interlocks
Travis Wilkins
Job description rn supervisor
Job description rn supervisor
Mastercare ClearLake Houston
Managing Performance Using Job Descriptions
Managing Performance Using Job Descriptions
AlphaStaff
Function rank job description template
Function rank job description template
Anuar Abdul Fattah
Developing Effective Job Descriptions -10/09
Developing Effective Job Descriptions -10/09
Dean Isaacs
Ch06
Ch06
muditcool
Divisional structure
Divisional structure
Nikita Agrawal
Sales supervisor job description
Sales supervisor job description
salesmanagement
organization charts....rules
organization charts....rules
Ahmed Al-Senosy Ph.D(cand),MSc,PMP,RMP
Organizational Structure
Organizational Structure
Mazhar Iftikhar (mazhariftikhar@gmail.com)
Job description
Job description
pedroazevedosantos
Divisional structures
Divisional structures
Tharujossy
Best Practices In Job Description Design and Management
Best Practices In Job Description Design and Management
HRTMS
How To Write A Job Description In 5 Steps
How To Write A Job Description In 5 Steps
Fit Small Business
Destaque
(17)
New CA Laws and Regulations Compliance Overview
New CA Laws and Regulations Compliance Overview
Funtional level based on 4 major clusters
Funtional level based on 4 major clusters
Year end process 2013
Year end process 2013
Product marketing org structure + interlocks
Product marketing org structure + interlocks
Job description rn supervisor
Job description rn supervisor
Managing Performance Using Job Descriptions
Managing Performance Using Job Descriptions
Function rank job description template
Function rank job description template
Developing Effective Job Descriptions -10/09
Developing Effective Job Descriptions -10/09
Ch06
Ch06
Divisional structure
Divisional structure
Sales supervisor job description
Sales supervisor job description
organization charts....rules
organization charts....rules
Organizational Structure
Organizational Structure
Job description
Job description
Divisional structures
Divisional structures
Best Practices In Job Description Design and Management
Best Practices In Job Description Design and Management
How To Write A Job Description In 5 Steps
How To Write A Job Description In 5 Steps
Semelhante a Whbm08
Whbm08
Whbm08
Shakeel Ahmed
Whbm08
Whbm08
PMAS UIIT Rawalpindi
Whbm06 140301020106-phpapp01
Whbm06 140301020106-phpapp01
international islamic university islamabad
Whbm06
Whbm06
Zakir Abbas
Whbm06
Whbm06
Shakeel Ahmed
Whbm06
Whbm06
PMAS UIIT Rawalpindi
Whbm06 110511132336-phpapp01
Whbm06 110511132336-phpapp01
Muzzamil Ihsan
Cost Accounting Chapter 9
Cost Accounting Chapter 9
Institute of Management Studies UOP
Whbm09
Whbm09
PMAS UIIT Rawalpindi
Whbm09
Whbm09
Shakeel Ahmed
Depreciation and Accounting Concern.ppt
Depreciation and Accounting Concern.ppt
AliHadi319773
Williams09
Williams09
Institute of Management Studies UOP
Chap009 notes
Chap009 notes
Fatima Ehsan
Inventories
Inventories
Abdullah Kareem
yuty
yuty
ssuserce9546
Gnb 07 12e
Gnb 07 12e
Saif Mahmud
Merchandising-Activities-POA-22022023-035005pm.pptx
Merchandising-Activities-POA-22022023-035005pm.pptx
MuhammadOsama696493
Accounting session 3
Accounting session 3
Anum Fatima
Gnb 02 12e
Gnb 02 12e
Saif Mahmud
Whbm19
Whbm19
Shakeel Ahmed
Semelhante a Whbm08
(20)
Whbm08
Whbm08
Whbm08
Whbm08
Whbm06 140301020106-phpapp01
Whbm06 140301020106-phpapp01
Whbm06
Whbm06
Whbm06
Whbm06
Whbm06
Whbm06
Whbm06 110511132336-phpapp01
Whbm06 110511132336-phpapp01
Cost Accounting Chapter 9
Cost Accounting Chapter 9
Whbm09
Whbm09
Whbm09
Whbm09
Depreciation and Accounting Concern.ppt
Depreciation and Accounting Concern.ppt
Williams09
Williams09
Chap009 notes
Chap009 notes
Inventories
Inventories
yuty
yuty
Gnb 07 12e
Gnb 07 12e
Merchandising-Activities-POA-22022023-035005pm.pptx
Merchandising-Activities-POA-22022023-035005pm.pptx
Accounting session 3
Accounting session 3
Gnb 02 12e
Gnb 02 12e
Whbm19
Whbm19
Whbm08
1.
Slide 8-1
Chapter INVENTORIES AND THE 8 COST OF GOODS SOLD McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
2.
Slide 8-2
Inventory Defined Inventory Defined Inventory Inventory Goods owned Goods owned Current Current and held for sale and held for sale asset asset to customers to customers McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
3.
Slide 8-3
The Flow of Inventory Costs The Flow of Inventory Costs BALANCE SHEET As purchase costs Current assets: (or manufacturing Inventory costs) are incurred $ $ as goods INCOME STATEMENT are sold Revenue $ Cost of goods sold Gross profit Expenses Net income McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
4.
Slide 8-4
The Flow of Inventory Costs The Flow of Inventory Costs In a perpetual inventory system, inventory entries parallel the flow of costs. GENERAL JOURNAL P Date Account Titles and Explanation R Debit Credit Entry on Purchase Date Inventory $$$$ Accounts Payable $$$$ Entry on Sale Date Cost of Goods Sold $$$$ Inventory $$$$ McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
5.
Slide 8-5
Which Unit Did We Sell? Which Unit Did We Sell? When identical units of inventory have different unit costs, a question naturally arises as to which of these costs should be used in recording a sale of inventory. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
6.
Slide 8-6
Inventory Subsidiary Ledger Inventory Subsidiary Ledger A separate subsidiary account is maintained A separate subsidiary account is maintained for each item in inventory. for each item in inventory. Item LL002 Primary supplier Electronic City Description Laser Light Secondary supplier Electric Company Location Storeroom 2 Inventory level: Min: 25 Max: 200 Purchased Sold Balance Cost of Unit Unit Goods Unit Date Units Cost Total Units Cost Sold Units Cost Total Sept. 5 100 $ 30 $ 3,000 100 $ 30 $ 3,000 Sept. 9 75 50 3,750 100 30 3,000 75 50 3,750 Sept. 10 10 ? ? ? ? ? ? ? ? How can we determine the unit cost for the Sept. 10 sale? McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
7.
Slide 8-7
Inventory Cost Flows Inventory Cost Flows We use one of these inventory valuation methods to determine cost of inventory sold. Specific Average identification cost FIFO LIFO McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
8.
Slide 8-8
Information for the Following Information for the Following Inventory Examples Inventory Examples The Bike Company (TBC) McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
9.
Slide 8-9
Specific Identification Specific Identification When a unit is sold, the specific cost of the unit sold is added to cost of goods sold. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
10.
Slide 8-10
Specific Identification – Example Specific Identification – Example On August 14, TBC sold 20 bikes for $130 each. On August 14, TBC sold 20 bikes for $130 each. Nine bikes originally cost $91 and 11 bikes Nine bikes originally cost $91 and 11 bikes originally cost $106. originally cost $106. Continue McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
11.
Slide 8-11
Specific Identification – Example Specific Identification – Example The Cost of Goods Sold for the August 14 sale is The Cost of Goods Sold for the August 14 sale is $1,985, leaving $515 and 5 units in inventory. $1,985, leaving $515 and 5 units in inventory. Let’s look at the entries for Continue the Aug. 14 sale. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
12.
Slide 8-12
Specific Identification – Example Specific Identification – Example Retail Retail Cost Cost A similar entry is A similar entry is made after each sale. Continue made after each sale. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
13.
Slide 8-13
Specific Identification – Example Specific Identification – Example Cost of Goods Cost of Goods Sold for Sold for August 31 = August 31 = $2,610 $2,610 Additional purchases were made on August 17 and 28. Additional purchases were made on August 17 and 28. Costs associated with sales on August 31 were as follows: 1 @ $91, Costs associated with sales on August 31 were as follows: 1 @ $91, 3 @ $106, 15 @ $115, & 4 @ $119. 3 @ $106, 15 @ $115, & 4 @ $119. McGraw-Hill/Irwin Continue © The McGraw-Hill Companies, Inc., 2002
14.
Slide 8-14
Specific Identification – Example Specific Identification – Example Income Statement COGS = $4,595 Balance Sheet Inventory = $1,395 1 @ $ 106 = $ 106 5 @ $ 115 = 575 6 @ $ 119 = 714 End. Inv. © The$ 1,395 Companies, Inc., 2002 McGraw-Hill McGraw-Hill/Irwin
15.
Slide 8-15
Not really. Specific Since specific identification is hard to use identification is so when we sell a lot of easy, can’t we use it inventory that has lots of all the time? different costs. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
16.
Slide 8-16
Average-Cost Method Average-Cost Method When a unit is sold, the average cost of each unit in inventory is assigned to cost of goods sold. Cost of Goods Units on hand Available for ÷ on the date of Sale sale McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
17.
Slide 8-17
Average-Cost Method – Example Average-Cost Method – Example The average cost per unit The average cost per unit must be computed prior must be computed prior to each sale. to each sale. $100 = $2,500 ÷ 25 $100 = $2,500 ÷ 25 On August 14, TBC sold 20 bikes for $130 each. On August 14, TBC sold 20 bikes for $130 each. Continue McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
18.
Slide 8-18
Average-Cost Method – Example Average-Cost Method – Example The average cost per The average cost per unit is $100. unit is $100. $100 = $2,500 ÷ 25 $100 = $2,500 ÷ 25 Let’s look at the entries Continue for the Aug. 14 sale. Inc., 2002 McGraw-Hill/Irwin © The McGraw-Hill Companies,
19.
Slide 8-19
Average-Cost Method – Example Average-Cost Method – Example Retail Retail Cost Cost A similar entry is A similar entry is made after each sale. Continue made after each sale. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
20.
Slide 8-20
Average-Cost Method – Example Average-Cost Method – Example Additional purchases were made on August 17 and Additional purchases were made on August 17 and August 28. August 28. On August 31, an additional 23 units were sold. On August 31, an additional 23 units were sold. Continue McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
21.
Slide 8-21
Average-Cost Method – Example Average-Cost Method – Example $114 = $3,990 ÷ 35 $114 = $3,990 ÷ 35 McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
22.
Slide 8-22
Average-Cost Method – Example Average-Cost Method – Example The average cost per The average cost per $114 = $3,990 ÷ 35 $114 = $3,990 ÷ 35 unit is $114. unit is $114. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
23.
Slide 8-23
Average-Cost Method – Example Average-Cost Method – Example Income Statement COGS = $4,622 Balance Sheet Inventory = $1,368 $114 × 12 = $1,368 $114 × 12 = $1,368 McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
24.
Slide 8-24
First-In, First-Out Method (FIFO) First-In, First-Out Method (FIFO) Oldest Oldest Costs of Costs of Costs Costs Goods Sold Goods Sold Recent Recent Ending Ending Costs Costs Inventory Inventory McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
25.
Slide 8-25
FIFO – Example FIFO – Example The Cost of Goods Sold for the August 14 sale is $1,970, The Cost of Goods Sold for the August 14 sale is $1,970, leaving $530 and 5 units in inventory. leaving $530 and 5 units in inventory. On August 14, TBC sold 20 bikes for $130 each. On August 14, TBC sold 20 bikes for $130 each. Continue McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
26.
Slide 8-26
FIFO – Example FIFO – Example Retail Retail Cost Cost A similar entry is A similar entry is made after each sale. Continue made after each sale. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
27.
Slide 8-27
FIFO – Example FIFO – Example Additional purchases were made on Aug. 17 and Aug. 28. Additional purchases were made on Aug. 17 and Aug. 28. CostOn August 31, an additionalAugust 31 = $2,600 CostOn August 31,Sold for Augustwere sold. of Goods Sold for 23 units 31 = $2,600 of Goods an additional 23 units were sold. McGraw-Hill/Irwin Continue © The McGraw-Hill Companies, Inc., 2002
28.
Slide 8-28
FIFO – Example FIFO – Example Income Statement COGS = $4,570 Balance Sheet 2 @ $ 115 = $ 230 10 @ $ 119 = 1,190 Inventory = $1,420 End. Inv. $ 1,420 McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
29.
Slide 8-29
Last-In, First-Out Method (LIFO) Last-In, First-Out Method (LIFO) Recent Recent Costs of Costs of Costs Costs Goods Sold Goods Sold Oldest Oldest Ending Ending Costs Costs Inventory Inventory McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
30.
Slide 8-30
LIFO – Example LIFO – Example The Cost of Goods Sold for the August 14 sale is The Cost of Goods Sold for the August 14 sale is $2,045, leaving $455 and 5 units in inventory. $2,045, leaving $455 and 5 units in inventory. On August 14, TBC sold 20 bikes for $130 each. On August 14, TBC sold 20 bikes for $130 each. Continue McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
31.
Slide 8-31
LIFO – Example LIFO – Example Retail Retail Cost Cost A similar entry is A similar entry is made after each sale. Continue made after each sale. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
32.
Slide 8-32
LIFO – Example LIFO – Example Additional purchases were made on Aug. 17 and Aug. 28. Additional purchases were made on Aug. 17 and Aug. 28. Cost of Aug. 31, anSold for August 31sold. Cost On Goods anadditional 23 units were sold. of Aug. 31, Sold for August 31 = $2,685 Goods additional 23 units were = $2,685 On Continue © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin
33.
Slide 8-33
LIFO – Example LIFO – Example Income Statement COGS = $4,730 Balance Sheet 5 @ $ 91 = $ 455 Inventory = $1,260 7 @ $ 115 = 805 End. Inv. $ 1,260 McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
34.
Slide
Inventory Valuation Methods: A Summary 8-34 Costs Allocated to: Valuation Cost of Goods Method Sold Inventory Comments Specific Actual cost of Actual cost of units Parallels physical flow identification the units sold remaining Logical method when units are unique May be misleading for identical units Average cost Number of units Number of units on Assigns all units the same sold times the hand times the average unit cost average unit cost average unit cost Current costs are averaged in with older costs First-in, First-out Cost of earliest Cost of most Cost of goods sold is based (FIFO) purchases on recently on older costs hand prior to the purchased units Inventory valued at current sale costs May overstate income during periods of rising prices; may increase income taxes due Last-in, First-out Cost of most Cost of earliest Cost of goods sold shown at (LIFO) recently purchases recent prices purchased units (assumed still in Inventory shown at old (and inventory) perhaps out of date) costs Most conservative method during periods of rising prices; often results in lower McGraw-Hill/Irwin income taxes Companies, Inc., 2002 © The McGraw-Hill
35.
Slide 8-35
The Principle of Consistency The Principle of Consistency Once a company has adopted a particular accounting method, it should follow that method consistently, rather than switch methods from one year to the next. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
36.
Slide 8-36
Just-In-Time (JIT) Inventory Just-In-Time (JIT) Inventory Systems Systems This inventory arrived just in time for us to use in the manufacturing process. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
37.
Slide 8-37
Taking a Physical Inventory Taking a Physical Inventory The primary reason for taking a physical inventory The primary reason for taking a physical inventory is to adjust the perpetual inventory records for is to adjust the perpetual inventory records for unrecorded shrinkage losses, such as theft, unrecorded shrinkage losses, such as theft, spoilage, or breakage. spoilage, or breakage. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
38.
Slide 8-38
LCM and Other Write-Downs LCM and Other Write-Downs of Inventory of Inventory Reduces the value Reduces the value Obsolescence Obsolescence of the inventory. of the inventory. Lower of Cost Lower of Cost Adjust inventory Adjust inventory or Market or Market value to the lower value to the lower (LCM) (LCM) of historical cost or of historical cost or current current replacement cost replacement cost (market). (market). McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
39.
Slide 8-39
Goods In Transit Goods In Transit A sale should be recorded when title A sale should be recorded when title to the merchandise passes to the to the merchandise passes to the buyer. buyer. F.O.B. F.O.B. F.O.B. F.O.B. shipping shipping destination destination point title point title point title point title passes to passes to passes to passes to buyer at the buyer at the Year buyer at the buyer at the point of point of End point of point of shipment. shipment. destination. destination. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
40.
Slide 8-40
Periodic Inventory Systems Periodic Inventory Systems In a periodic inventory system, inventory entries are as follows. Note that an entry is not Note that an entry is not made to inventory. made to inventory. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
41.
Slide 8-41
Periodic Inventory Systems Periodic Inventory Systems In a periodic inventory system, inventory entries are as follows. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
42.
Slide 8-42
Periodic Inventory Systems Periodic Inventory Systems The inventory on hand and the cost of goods sold for the year are not determined until year-end. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
43.
Slide 8-43
Periodic Inventory Systems Periodic Inventory Systems We use one of these inventory valuation methods in a periodic inventory system. Specific Average identification cost FIFO LIFO McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
44.
Slide 8-44
Information for the Following Information for the Following Inventory Examples Inventory Examples Computers, Inc. Mouse Pad Inventory Date Units $/Unit Total Beginning Inventory 1,000 $ 5.25 $ 5,250.00 Purchases: Jan. 3 300 5.30 1,590.00 June 20 150 5.60 840.00 Sept. 15 200 5.80 1,160.00 Nov. 29 150 5.90 885.00 Goods Available for Sale 1,800 $ 9,725.00 Ending Inventory 1,200 ? Cost of Goods Sold 600 ? McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
45.
Slide 8-45
Specific Identification – Example Specific Identification – Example By reviewing actual purchase invoices, Computers, Inc. determines that the 1,200 mouse pads on hand at year-end have an actual total cost of $6,400. Determine the cost of goods sold for the year. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
46.
Slide 8-46
Specific Identification – Example Specific Identification – Example Computers, Inc. Mouse Pad Inventory Date Units $/Unit Total Beginning Inventory 1,000 $ 5.25 $ 5,250.00 Purchases: Jan. 3 300 5.30 1,590.00 June 20 150 5.60 840.00 Sept. 15 Goods Sold 200 Cost of Goods Sold 5.80 1,160.00 Nov. 29of Cost 150 5.90 885.00 -- $9,725 $6,400 = $3,325 Goods $6,400 = $3,325 $9,725 Available for Sale 1,800 $ 9,725.00 Ending Inventory 1,200 $ 6,400.00 Cost of Goods Sold 600 $ 3,325.00 McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
47.
Slide 8-47
Average-Cost Method Average-Cost Method The average cost is The average cost is calculated at year- calculated at year- end as follows: end as follows: Total Cost of Total Number Goods of Units Available for ÷ Available for Sale Sale McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
48.
Slide 8-48
Average-Cost Method – Example Average-Cost Method – Example Computers, Inc. Mouse Pad Inventory Avg. Cost $9,725 ÷ 1,800 Avg. Cost $9,725 ÷ 1,800 Date Units $/Unit Total = $5.40278 = $5.40278 Beginning Ending Inventory Ending Inventory Inventory 1,000 $ 5.25 $ 5,250.00 Avg. Cost $5.40278 × 1,200 = Avg. Cost $5.40278 × 1,200 = Purchases: $6,483 $6,483 Jan. 3 300 5.30 1,590.00 June 20 150 5.60 840.00 Cost of Goods Sold Cost of Goods Sold Sept. 15 200 5.80 1,160.00 Avg. Cost $5.40278 × 600 = Avg. Cost $5.40278 × 600 = Nov. 29 150 5.90 885.00 $3,242 $3,242 Goods Available for Sale 1,800 $ 9,725.00 Ending Inventory 1,200 1,200 $ 6,483.00 ? Cost of Goods Sold 600 $ 3,242.00 ? McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
49.
Slide 8-49
First-In, First-Out Method (FIFO) First-In, First-Out Method (FIFO) Oldest Oldest Costs of Costs of Costs Costs Goods Sold Goods Sold Recent Recent Ending Ending Costs Costs Inventory Inventory McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
50.
Slide 8-50
FIFO – Example FIFO – Example Computers, Inc. Remember: Start Mouse Pad Inventory with the 11/29 Date Units $/Unit Total purchase and then Beginning add other purchases Inventory 1,000 $ 5.25 $ 5,250.00 until you reach the Purchases: number of units in Jan. 3 300 5.30 1,590.00 ending inventory. June 20 150 5.60 840.00 Sept. 15 200 5.80 1,160.00 Nov. 29 150 5.90 885.00 Goods Available for Sale 1,800 $ 9,725.00 Ending Inventory 1,200 ? Cost of Goods Sold 600 ? McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
51.
Slide 8-51
FIFO – Example FIFO – Example Cost of Date Beg. Inv. Purchases End. Inv. Goods Sold 1,000@$5.25 600@$5.25 400@$5.25 Jan. 3 300@$5.30 300@$5.30 June 20 150@$5.60 150@$5.60 Sept. 15 200@$5.80 200@$5.80 Nov. 29 150@$5.90 150@$5.90 Units 1,200 150 600 Now, we have allocated Costs $6,575 $3,150 the cost to allNow, let’s complete the Now, units complete the 1,200 let’s of Goods Available for table. table. Cost in ending inventory. Sale $9,725 McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
52.
Slide 8-52
FIFO – Example FIFO – Example Computers, Inc. Completing the table Mouse Pad Inventory summarizes the Date Units $/Unit Total computations just Beginning made. Inventory 1,000 $ 5.25 $ 5,250.00 Purchases: Jan. 3 300 5.30 1,590.00 June 20 150 5.60 840.00 Sept. 15 200 5.80 1,160.00 Nov. 29 150 5.90 885.00 Goods Available for Sale 1,800 $ 9,725.00 Ending Inventory 1,200 $ 6,575.00 Cost of Goods Sold 600 $ 3,150.00 McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
53.
Slide 8-53
Last-In, First-Out Method (LIFO) Last-In, First-Out Method (LIFO) Recent Recent Costs of Costs of Costs Costs Goods Sold Goods Sold Oldest Oldest Ending Ending Costs Costs Inventory Inventory McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
54.
Slide 8-54
LIFO – Example LIFO – Example Remember: Start with Computers, Inc. Mouse Pad Inventory beginning inventory Date Units $/Unit Total and then add other Beginning purchases until you Inventory 1,000 $ 5.25 $ 5,250.00 reach the number of Purchases: units in ending Jan. 3 300 5.30 1,590.00 inventory. June 20 150 5.60 840.00 Sept. 15 200 5.80 1,160.00 Nov. 29 150 5.90 885.00 Goods Available for Sale 1,800 $ 9,725.00 Ending Inventory 1,200 ? Cost of Goods Sold 600 ? McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
55.
Slide 8-55
LIFO – Example LIFO – Example Cost of Date Beg. Inv. Purchases End. Inv. Goods Sold 1,000@$5.25 1,000@$5.25 Jan. 3 300@$5.30 200@$5.30 100@$5.30 June 20 150@$5.60 150@$5.60 Sept. 15 200@$5.80 200@$5.80 Nov. 29 150@$5.90 150@$5.90 Units 1,200 1,000 600 100 Now, we have allocated Costs $6,310 $3,415 Next, let’s Next, let’s the cost to all 1,200 units complete the complete the Cost in endingAvailable for Sale of Goods inventory. $9,725 table. table. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
56.
Slide 8-56
LIFO – Example LIFO – Example Computers, Inc. Completing the table Mouse Pad Inventory summarizes the Date Units $/Unit Total computations just Beginning made. Inventory 1,000 $ 5.25 $ 5,250.00 Purchases: Jan. 3 300 5.30 1,590.00 June 20 150 5.60 840.00 Sept. 15 200 5.80 1,160.00 Nov. 29 150 5.90 885.00 Goods Available for Sale 1,800 $ 9,725.00 Ending Inventory 1,200 $ 6,310.00 Cost of Goods Sold 600 $ 3,415.00 McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
57.
Slide 8-57
Importance of an Accurate Importance of an Accurate Valuation of Inventory Valuation of Inventory Errors in Measuring Inventory Beginning Inventory Ending Inventory Effect on Income Statement Overstated Understated Overstated Understated Goods Available for Sale + - 0 0 Cost of Goods Sold + - - + Gross Profit - + + - Net Income - + + - Effect on Balance Sheet Ending Inventory 0 0 + - Retained Earnings - + + - An error in ending inventory in a year will result in the An error in ending inventory in a year will result in the same error in the beginning inventory of the next year. same error in the beginning inventory of the next year. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
58.
Slide 8-58
For interim fi nancial statements, w e may need to estimate e nding inventory an d cost of goods sold. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
59.
Slide 8-59
The Gross Profit Method The Gross Profit Method Determine cost of goods Determine cost of goods available for sale. available for sale. Estimate cost of goods sold Estimate cost of goods sold by multiplying the net sales by multiplying the net sales by the cost ratio. by the cost ratio. Deduct cost of goods sold Deduct cost of goods sold from cost of goods available from cost of goods available for sale to determine ending for sale to determine ending inventory. inventory. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
60.
Slide 8-60
Gross Profit Method – Example Gross Profit Method – Example In March of 2003, Chemico’s inventory was In March of 2003, Chemico’s inventory was destroyed by fire. Chemico’s normal gross profit destroyed by fire. Chemico’s normal gross profit ratio is 30% of net sales. At the time of the fire, ratio is 30% of net sales. At the time of the fire, Chemico showed the following balances: Chemico showed the following balances: Sales $ 31,500 Sales returns 1,500 Beginning Inventory 12,000 Net cost of goods purchased 20,500 McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
61.
Slide 8-61
Gross Profit Method – Example Gross Profit Method – Example × 70% McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
62.
Slide 8-62
Inventory Turnover Rate Inventory Turnover Rate Measures how quickly a company Measures how quickly a company sells its merchandise inventory. sells its merchandise inventory. Average Inventory = (Beg. Inv. + End. Inv.) ÷ 2 Average Inventory = (Beg. Inv. + End. Inv.) ÷ 2 A ratio that is low compared to competitors A ratio that is low compared to competitors suggests inefficient use of assets. suggests inefficient use of assets. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
63.
Slide 8-63
Accounting Methods Can Affect Accounting Methods Can Affect Analytical Ratios Analytical Ratios Remember that identical companies that use different inventory methods (e.g., FIFO and LIFO) will have different inventory turnover ratios. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
64.
Slide 8-64
End of Chapter 8 End of Chapter 8 Careful! If you drop the inventory we will have another write down. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
Notas do Editor
2
4
4
4
4
4
4
50 51 51 51
50 51 51 51
50 51 51 51
29 29 29 29
30 30 36 36
29 29 29 29
41 41 41 41
42 47 47 47
29 29 29 29
18 18 18 18
97 97 97 97
97 97 97 97
97 97 97 97