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 Learn more about Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below. Recommended textbooks for you FINANCIAL ACCOUNTING ISBN:9781259964947 Author:Libby Publisher:MCG Accounting ISBN:9781337272094 Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E. Publisher:Cengage Learning, Accounting Information Systems ISBN:9781337619202 Author:Hall, James A. Publisher:Cengage Learning, Horngren's Cost Accounting: A Managerial Emphasis... ISBN:9780134475585 Author:Srikant M. Datar, Madhav V. Rajan Publisher:PEARSON Intermediate Accounting ISBN:9781259722660 Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas Publisher:McGraw-Hill Education Financial and Managerial Accounting ISBN:9781259726705 Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles Publisher:McGraw-Hill Education FINANCIAL ACCOUNTING ISBN:9781259964947 Author:Libby Publisher:MCG Accounting ISBN:9781337272094 Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E. Publisher:Cengage Learning, Accounting Information Systems ISBN:9781337619202 Author:Hall, James A. Publisher:Cengage Learning, Horngren's Cost Accounting: A Managerial Emphasis... ISBN:9780134475585 Author:Srikant M. Datar, Madhav V. Rajan Publisher:PEARSON Intermediate Accounting ISBN:9781259722660 Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas Publisher:McGraw-Hill Education Financial and Managerial Accounting ISBN:9781259726705 Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles Publisher:McGraw-Hill Education CHAPTER 5 ACCOUNTING FOR MERCHANDISING OPERATIONS CHAPTER LEARNING OBJECTIVES 1.Describe merchandising operations and inventory systems. Because of inventory, a merchandising company has sales revenue, cost of goods sold, and gross profit. To account for inventory, a merchandising company must choose between a perpetual and a periodic inventory system. 2.Record purchases under a perpetual inventory system. The company debits the Inventory account for all purchases of merchandise and, freight-in, and credits it for purchase discounts and purchase returns and allowances. 3.Record sales under a perpetual inventory system. When a merchandising company sells inventory, it debits Accounts Receivable (or Cash) and credits Sales Revenue for the selling price of the merchandise. At the same time, it debits Cost of Goods Sold and credits Inventory for the cost of the inventory items sold. Sales Returns and Allowances and Sales Discounts are debited and are contra revenue accounts. 4.Apply the steps in the accounting cycle to a merchandising company. Each of the required steps in the accounting cycle for a service company applies to a merchandising company. A worksheet is again an optional step. Under a perpetual inventory system, the company must adjust the Inventory account to agree with the physical count. 5.Prepare financial statements for a merchandising company. The income statement has the following components: sales revenues, cost of goods sold, gross profit, operating expenses, other income and expense, and interest expense. A comprehensive income statement adds or subtracts any items of other comprehensive income to net income to arrive at other comprehensive income. a6.Prepare a worksheet for a merchandising company. The steps in preparing a worksheet for a merchandising company are the same as for a service company. The unique accounts for a merchandiser are Inventory, Sales Revenue, Sales Returns and Allowances, Sales Discounts, and Cost of Goods Sold. a7.Record purchases and sales under a periodic inventory system. In recording purchases under a periodic system, companies must make entries for (a) cash and credit purchases, (b) purchase returns and allowances, (c) purchase discounts, and (d) freight costs. In recording sales, companies must make entries for (a) cash and credit sales, (b) sales returns and allowances, and (c) sales discounts. Under what account is merchandise acquisition recorded under the perpetual system of inventory?In a perpetual system, you record purchases in the raw materials inventory account or the merchandise account.
When a perpetual inventory system is used what account does the company debit?When a company uses the perpetual inventory system, the general ledger account Inventory is continually being updated for all the purchases and sales of goods: The costs of the goods purchased are debited to Inventory.
What account is debited when recording a inventory purchase using the perpetual inventory system?The Merchandise Inventory account is debited when recording the purchase of inventory using the perpetual inventory system.
Which account is debited for a purchase of merchandise on account?If merchandise are purchased on account, the accounts involved in the transaction are the purchases account and accounts payable account. The purchases account is debited and the accounts payable account is credited.
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What account is debited for the acquisition of merchandise for resale in a perpetual inventory system?
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