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Seller’s retail entries: Problem type 1 Click following link to download this documentweek 5 Sellers retail entries Problem type 1.docx

Seller’s retail entries: Problem type 3 Click following link to download this documentweek 5 Sellers retail entries Problem type 3.docx

Periodic inventory: Buyer’s entries Entry 1 on July 10: The purchase is made on account, which means that it is made on credit. Debit Purchases: Purchases, which represents the cost of inventory purchased this period, is debited (increased). Credit Accounts Payable: Accounts Payable, a current liability, is credited (increased) because Watson owes Ward Company more. Entry 2 on

Inventory costs Click following link to download this documentInventory costs.docx

Inventory errors: Problem type 1 As shown in the chart above, errors in calculating the ending inventory cost have a direct effect on gross profit and net income. Errors in calculating the beginning inventory cost have an inverse effect on gross profit and net income. Note that the effects of errors in calculating beginning and ending inventory costs have an

Maturity dates Click following link to download this documentMaturity dates.docx

Merchandise inventory: Lower of cost or market method The lower of cost or market method (LCM) states that if prices fall on inventory items, a loss should be recognized in the period of the decline in price. Market is defined as the replacement cost of the inventory item. If the replacement cost of inventory falls below the cost, we write the

Merchandise inventory calculation: FOB and consigned goods Click following link to download this documentMerchandise inventory calculation – FOB and consigned goods.docx

Merchandising: Closing entries After the first two closing entries, the Income Summary account contains the net income for the period. To journalize the third closing entry, net income must first be computed. Net income is the difference between revenues (net sales, in this problem) and expenses. First, we must compute net sales: Net sales = Sales – Sales discounts

Merchandising: Computing income statement amounts In this exercise you are being asked to compute Net Sales (Net Revenues), Gross Profit, and Net Income. Below are the formulas and the computations of each of the required elements. Net Sales = Sales – Discounts – Returns and Allowances.   = $127,900 – $3,900 – $2,900   = $121,100 = Net Sales –