BCA 001 – Accounting Plus
Chapter 11: Accounting for a
Merchandising Concern
(Special Considerations)
DATA PRIVACY AGREEMENT
CONFIDENTIALITY NOTICE: All online materials, such as emails, PowerPoint
presentations, videos, etc. given during this semester, are intended for
your own personal and educational use ONLY. Those materials may contain
sensitive personal data or other confidential information which may not be
disclosed to the public in accordance with the Data Privacy Act.
Please be informed that any unauthorized printing, copying, or any form of
unauthorized dissemination, distribution, disclosure, forwarding of, or
acting in reliance upon these information contained in the online lecture
materials is strictly prohibited under the Philippine Copyright Law.
2
Chapter 11: Accounting for a Merchandising Concern (Special Considerations)
Learning Objectives:
▪ LO 1-To compare and contrast the entries needed
for the periodic and perpetual inventory system.
.
3
Review
Chapter 10: Accounting for a Merchandising
(Completing the Cycle)
L0 1 To compare and contrast the entries needed for the periodic and perpetual inventory system.
Inventory Systems
This inventory system is primary used by businesses. In a
periodic inventory system no entries are made to the inventory
account as merchandise is bought or sold. At the end of the
period, when the inventory is counted, entries will be made to
the inventory account to establish the proper inventory balance.
L0 1 To compare and contrast the entries needed for the periodic and perpetual inventory system.
Inventory Systems
An alternative inventory system. Under this inventory system,
the inventory account is continuously updated. Perpetually
updating the inventory account requires that at the time of
purchase, merchandise acquisition be recorded as debit to the
inventory account. At the time of sale, the cost of sales is
determined and recorded by a debit to cost of sales account
and a credit to the inventory account.
Purchase Related Transactions
1. On January 1, 2021 ED SARAN Company purchased P60,000 worth of
merchandise on account from EILLIE BILISH Company. Terms: FOB shipping
point 2/10, n/30
Purchases 60,000 Inventory 60,000
Accounts Payable 60,000 Accounts Payable 60,000
7
2.On January 3, ED SARAN Company paid P3,000 freight to
transport the merchandise purchased on January 1.
Freight-In 3,000 Inventory 3,000
Cash 3,000 Cash 3,000
8
3. On January 4, ED SARAN returned merchandise costing P10,000
related to January 1 purchases.
Accounts Payable 10,000 Accounts Payable 10,000
PRA 10,000 Inventory 10,000
9
4. On January 10, ED SARAN paid the merchandise purchased on
January 1.
Accounts Payable 50,000 Accounts Payable 50,000
Purchase Discount 1,000 Inventory 1,000
Cash 49,000 Cash 49,000
Return Discount 10
Sales Related Transactions
On January 12, ED SARAN sold merchandise on account costing
20,000 for P24,000. Terms: 2/10. n/30.
Accounts Receivable 24,000 Account Receivable 24,000
Sales 24,000 Sales 24,000
Cost of Sales 20,000
Inventory 20,000
11
On January 13, customer returned merchandise costing 10,000
that had been sold on account for 12,000. (Related to January 12
sales)
SRA 12,000 SRA 12,000
Accounts Receivable 12,000 Accounts Receivable 12,000
Inventory 10,000
Cost of Sales 10,000
12
On January 18, Received payment from customer for merchandise
sold on account on January 12, 2021.
Cash 11,760 Cash 11,760
Sales Discount 240 Sales Discount 240
Accounts Receivable 12,000 Accounts Receivable 12,000
Return Sales 13
Discount
Related to Beginning and Ending Inventory
Beginning Inventory 150,000
Ending Inventory based on the physical count P125,000
Key Note: You can use either adjusting entry method or closing entry method.
To remove Beginning Inventory
Income Summary 150,000 No Entry
Inventory, Beg 150,000
To set-up Ending inventory
Inventory, End 125,000 No Entry
Income Summary 125,000
14
Final Examination
Coverage: Accounting for Merchandising Operation.
Schedule: Thursday, December 18, 2021
15
“
▪ “ If you are working on
something that you care about,
you don’ t have to be pushed.
The vision pulls you.
16
Thank you and God bless!
References:
Textbook:
Basic Accounting, Made Easy, Ballada, (2018, 2019, 2020) Sampaloc, Manila
Conceptual Framework and Accounting Standards; Valix, Peralta, Valix (2019)
Websites:
Merchandising Definition (investopedia.com)
18
For questions and
concerns
[email protected]
https://www.facebook.com/ascelllow
19
