Merchandising Type
Merchandising Type
PURCHASING SELLING
( BUYER ) (SELLER )
MERCHANDISING –Periodic Inventory
• What’s new ?
• new accounts
• new terms
• new transactions
• new source documents
• new emphasis on point of view
• new “ format” of income statement
BUYER - the following account titles are used
1. Purchases ( Dr )
2. Purchase Returns & Allowances ( Cr )
3. Purchase Discounts ( Cr )
4. Freight In ( Dr )
5. If FOB Shipping Point – buyer pays the freight
cost .
6. If “ Debit memo – Buyer issued the debit
memorandum for the defective goods returned.
SELLER - the following account titles are used
1. Sales ( Cr )
2. Sales Returns & Allowances ( Dr )
3. Sales Discounts ( Dr )
4. Freight Out ( Dr )
5. If FOB Destination Point – seller pays the freight cost.
6. If “ Credit memo” – Seller issued credit memorandum
for the defective goods returned
PERIODIC INVENYORY SYSTEM
PURCHASING ACTIVITIES ( BUYER )
1. When purchased of merchandise
Purchases - XXX
Cash / Accounts Payable – xxx
2. When the freight cost is paid
Freight In - xxx
Cash - xxx
3. When returned of defective merchandise
Cash / Accounts Receivable – xxx
Purchase Returns & Allowances - xxx
4. When the accounts of merchandise purchased is paid ( without
discount )
Accounts Payable - XXX
Cash – xxx
5. When the accounts of merchandise purchased is paid ( with
discounts )
Accounts Payable - xxx
Purchase discounts - xxx
Cash - xxx
SELLING ACTIVITIES ( SELLER )
1. When worth of merchandise is sold
Cash / Accounts Receivable - XXX
Sales – xxx
2. When the freight cost is paid
Freight Out - xxx
Cash - xxx
3. When defective merchandise are returned by customer
Sales Returns & Allowances – xxx
Cash / Accounts Receivable - xxx
4. When the merchandise sold on credit is paid ( without
discounts )
Cash - XXX
Accounts Receivable – xxx
5. When the merchandise sold on credit is paid ( with
discounts )
Cash - xxx
Sales discounts - xxx
Accounts Receivable - xxx
• MERCHANDISE INVENTORY – represents the goods
acquired for sale
Purchases
MERCHANDISE INVENTORY
Debit Credit
goods for sale
FREIGHT IN PURCHASE RETURNS & ALLOWANCES
“sub” “contra “
added to PURCHASE DISCOUNTS
“contra “
HOW TO COMPUTE NET PURCHASES
• Purchases - P XXXX
• Plus : Freight In - P XX xxxx
• Less: Purchase Ret.& Allow - XXX
• Purchase Discounts XXX
• NET PURCHASES P XXXX
SALES – is an account used to refer to gross receipts of
the business from the sale of merchandise.
It is used to record the sale of merchandise
Sales
SALES REVENUE
Debit Credit
SALES RETURNS & ALLOW retail
“contra “
SALES DISCOUNTS
“contra”
HOW TO COMPUTE NET SALES
•Sales - P XXXX
• Less: Sales Returns & Allowances - P XXX
• Sales Discounts - XXX
• NET SALES P XXXX
TRANSPORTATION COSTS
Shipping charges on merchandise sold )