Chapter 8 Inventories and the cost of Goods sold Irwin/McGraw-Hill ?The McGraw-Hill Companies, Inc., 1999
?The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Chapter 8 Inventories and the Cost of Goods Sold
Inventory Defined Inventory Goods owned and Current held for sale to asset customers Irwin/McGraw-Hill ?The McGraw-Hill Companies, Inc, 1999
?The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Inventory Defined Goods owned and held for sale to customers Current asset Inventory
The Flow of Inventory Costs BALANCE SHEET Purchase cost (or manufacturing Current assets costs) as Inventory incurred as goods INCOME STATEMENT are sold Revenue Cost of goods sold Gross profit Expenses Net income Irwin/McGraw-Hill rme icoruw-Hill Companies, Inc., 1999
?The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Flow of Inventory Costs BALANCE SHEET Current assets: Inventory INCOME STATEMENT Revenue Cost of goods sold Gross profit Expenses Net income Purchase cost (or manufacturing costs) as incurred as goods are sold
The Flow of Inventory Costs In a perpetual inventory system, inventory entries parallel the flow of costs GENERAL JOURNAL Date Account Titles and Explanation Debit Credit Entry on Purchase Date Invento $$$ Accounts Payable $$$$ Entry on Sale Date Cost of Goods sold SSSS Inventor $$$$
?The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Flow of Inventory Costs GENERAL JOURNAL Date Account Titles and Explanation Debit Credit Entry on Purchase Date Inventory $$$$ Accounts Payable $$$$ Entry on Sale Date Cost of Goods Sold $$$$ Inventory $$$$ In a perpetual inventory system, inventory entries parallel the flow of costs
Which Unit Did We sell? Does It really Matter? When identical units of inventory have different unit costs, a question naturally arises as to which of these costs should be used in recording a sale of inventory GENERAL JOURNAL Date Account Titles and Explanation De bit Credit Entry on Sale Date Cost of Goods sold $$s Invento $$$$ Irwin/McGrau-Hill ?The McGraw-Hill Companies, Inc, 1999
?The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Which Unit Did We Sell? Does It Really Matter? GENERAL JOURNAL Date Account Titles and Explanation Debit Credit Entry on Sale Date Cost of Goods Sold $$$$ Inventory $$$$ When identical units of inventory have different unit costs, a question naturally arises as to which of these costs should be used in recording a sale of inventory