会计学原理英文教学课件：Chapter-06 Inventories and Cost of Sales

1、INVENTORIES AND COST OF SALESChapter 6DETERMINING INVENTORY ITEMSMerchandise inventory includes all goods that a company owns and holds for sale, regardless of where the goods are located when inventory is counted. Items requiring special attention include:Goods in TransitGoods Damaged or ObsoleteGo

2、ods on ConsignmentC 1FOB Destination PointPublic CarrierSellerBuyerGOODS IN TRANSITPublic CarrierSellerBuyerFOB Shipping PointOwnership passes to the buyer here.C 1GOODS ON CONSIGNMENTMerchandise is included in the inventory of the consignor, the owner of the inventory.ConsignorConsigneeThanks for s

3、elling my inventory in your store.C 1GOODS DAMAGED OR OBSOLETEDamaged or obsolete goods are not counted in inventory if they cannot be sold.Cost should be reduced to net realizable value if they can be sold.C 1DETERMINING INVENTORY COSTSInvoice CostInclude all expenditures necessary to bring an item

4、 to a salable condition and location.Minus Discounts and AllowancesPlus Import DutiesPlus FreightPlus StoragePlus InsuranceC 2INTERNAL CONTROLS AND TAKING APHYSICAL COUNTMost companies take a physical count of inventory at least once each year.When the physical count does not match the Merchandise I

5、nventory account, an adjustment must be made.Good internal controls over count include:Pre-numbered inventory tickets.Counters have no inventory responsibility.Counts confirm existence, amount, andquality of inventory item.Second count is taken.Manager confirms all items counted.C 2INVENTORY COSTING

6、 UNDER A PERPETUAL SYSTEMInventory affects . . . The matching principle requires matching costs with sales.Balance SheetIncome StatementP1INVENTORY COST FLOW ASSUMPTIONSCosting MethodSpecific Identification FIFO LIFO Weighted AverageInventory SystemPerpetual or PeriodicAccounting for inventory requi

7、res several decisions . . .P1INVENTORY COST FLOW ASSUMPTIONSFirst-In, First-Out(FIFO)Assumes costs flow in the order incurred.Last-In, First-Out(LIFO)Assumes costs flow in the reverse order incurred.Weighted AverageAssumes costs flow at an average of the costs available. P1INVENTORY COSTING ILLUSTRA

8、TIONDateActivityUnits Acquired at CostUnits Sold at RetailUnit Inv. Aug. 1 Beg. Inventory10units $ 91 = $ 910 10 Aug. 3 Purchased15units $ 106 = $ 1,590 25 Aug. 14 Sales 20 units $130 5 Aug. 17 Purchased20units $ 115 = $ 2,300 25 Aug. 28 Purchased10units $ 119 = $ 1,190 35 Aug. 31 Sales 23 units $15

9、0 12 Totals 55 $5,990 43Here is information about the mountain bike inventory of Trekking for the month of August.P1SPECIFIC IDENTIFICATIONWhen units are sold, the specific cost of the units sold is added to cost of goods sold.8 bikes $ 91 = $ 728 12 bikes 106 = 1,272 Cost of goods sold= $ 2,000 Tre

10、kking sold 20 bikes on August 14th with the following costs:The 23 bikes sold on August 31st had the following costs:2 bikes $ 91 = $ 182 3 bikes 106 = 318 15 bikes 115 = 1,725 3 bikes 119 = 357 Cost of goods sold= $ 2,582 P1SPECIFIC IDENTIFICATIONP1Income Statement Cost of Goods SoldBalance Sheet I

11、nventorySPECIFIC IDENTIFICATIONHere are the entries to record the purchases and sales. The numbers in red are determined by the cost flow assumption used.All purchases and sales are made on credit.The selling price of inventory was as follows: 8/14 $130 8/31 150P1FIRST-IN, FIRST-OUT (FIFO)Cost of Go

12、ods SoldEnding InventoryOldest CostsRecent CostsP1FIRST-IN, FIRST-OUT (FIFO) The Cost of Goods Sold for the August 14 sale is $1,970. After this sale, there are 5 units in inventory at $530 (5 $106) P1FIRST-IN, FIRST-OUT (FIFO) Cost of Goods Sold for August 31 = $2,600On August 31st, there are 12 un

13、its in inventory at $1,420 (2 $115 + 10 $119). P1FIRST-IN, FIRST-OUT (FIFO) Here are the entries to record the purchases and sales entries. The numbers in red are determined by the cost flow assumption used.All purchases and sales are made on credit.The selling price of inventory was as follows: 8/1

14、4 $130 8/31 150P1LAST-IN, FIRST-OUT (LIFO)Cost of Goods SoldEnding InventoryRecent CostsOldest CostsP1LAST-IN, FIRST-OUT (LIFO) The Cost of Goods Sold for the August 14 sale is $2,045. After this sale, there are 5 units in inventory at $455 (5 $91)P1LAST-IN, FIRST-OUT (LIFO) Cost of Goods Sold for A

15、ugust 31 = $2,685On August 31st, there are 12 units in inventory at $1,260: (5 $91 +,7 $115). P1LAST-IN, FIRST-OUT (LIFO) Here are the entries to record the purchases and sales entries. The numbers in red are determined by the cost flow assumption used.All purchases and sales are made on credit.The

16、selling price of inventory was as follows: 8/14 $130 8/31 150P1WEIGHTED AVERAGEWhen a unit is sold, the average cost of each unit in inventory is assigned to cost of goods sold. Cost of Goods Available for SaleUnits on hand on the date of saleP1WEIGHTED AVERAGE First, we need to compute the weighted

17、 average cost per unit of items in inventory.P1WEIGHTED AVERAGEThe Cost of Goods Sold for the August 14th sale is $2,000.After this sale, there are 5 units in inventory at $500.P1WEIGHTED AVERAGEP1WEIGHTED AVERAGECost of Goods Sold for August 31 = $2,622After the August 31 sale, there are 12 units i

18、n inventory at $1,368: (12 $114)P1WEIGHTED AVERAGEHere are the entries to record the purchases and sales entries for Trekking. The numbers in red are determined by the cost flow assumption used.All purchases and sales are made on credit.The selling price of inventory was as follows: 8/14 $130 8/31 1

19、50P1FINANCIAL STATEMENT EFFECTSOF COSTING METHODSBecause prices change, inventory methods nearly always assign different cost amounts.A1FINANCIAL STATEMENT EFFECTSOF COSTING METHODSAdvantages of MethodsSmoothes out price changes.Better matches current costs in cost of goods sold with revenues.Ending

20、 inventory approximates current replacement cost.First-In, First-OutWeighted AverageLast-In, First-OutA1TAX EFFECTS OF COSTING METHODSThe Internal Revenue Service (IRS) identifies several acceptable methods for inventory costing for reporting taxable income.If LIFO is used for tax purposes, the IRS

21、requires it be used in financial statements.A1CONSISTENCY IN USING COSTING METHODSThe consistency principle requires a company to use the same accounting methods period after period so that financial statements are comparable across periods.A1LOWER OF COST OR MARKETInventory must be reported at mark

22、et value when market is lower than cost.Can be applied three ways:(1)separately to each individual item.(2)to major categories of assets.(3)to the whole inventory.Defined as current replacement cost (not sales price).Consistent withthe conservatismprinciple.P2LOWER OF COST OR MARKETA motorsports retailer has the following items in inventory:P2LOWER OF COST OR MARKETHere is how to compute lower of cost or market for individual inventory items.P2LOWER OF COST OR MARKETHere is how to compute lo