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that are similar to the rationale manufacturers consider when offering discounts to retailers. It can help
solidify a long-term relationship with the customer, encourage the customer to purchase more, and de... | {"uploaded_via": "batch_uploader", "creator": "DocBook XSL Stylesheets V1.79.1", "title": "Principles of Accounting, Volume 1: Financial Accounting", "upload_timestamp": "2026-02-07T07:23:08.167529", "creationdate": "2019-04-24T10:32:54-05:00", "file_name": "FinancialAccounting-OP.pdf", "batch_upload": true, "file_type... |
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discount. If the customer does not pay within the discount window, but pays within 30 days, the retailing
company records a credit to Accounts Receivable, and a debit to Cash for the full amount stated on... | {"creationdate": "2019-04-24T10:32:54-05:00", "moddate": "2020-08-05T15:26:11-05:00", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "title": "Principles of Accounting, Volume 1: Financial Accounting", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "upload_timest... |
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recorded the following entry for the initial sale.
Since the retail doesn’t know at the point of sale whether or not the customer will qualify for the sales
discount, the entire account receivable of $1,000... | {"upload_timestamp": "2026-02-07T07:23:08.167529", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_size_mb": 156.7, "uploaded_via": "batch_uploader", "creator": "DocBook XSL Stylesheets V1.79.1", "total_pages": 1... |
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Since the customer paid the account in full within the discount qualification period of ten days, the following
journal entry on the retailer’s books reflects the payment.
Now, assume that the customer paid the retailer within the 30-day period but did not qualify for the discount.
The following entry reflects ... | {"uploaded_via": "batch_uploader", "creationdate": "2019-04-24T10:32:54-05:00", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_size_mb": 156.7, "batch_upload": true, "file_name": "FinancialAccounting-OP.pdf", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "... |
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0.00349... | Should employees or companies provide discounts to employees of other organizations? An
accountant’s employing organization usually has a code of ethics or conduct that addresses policies for
employee discounts. While many companies offer their employees discounts as a benefit, some
companies also offer discounts or... | {"moddate": "2020-08-05T15:26:11-05:00", "file_type": ".pdf", "upload_timestamp": "2026-02-07T07:23:08.167529", "batch_upload": true, "file_size_mb": 156.7, "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_name": "FinancialAccounting-OP.pdf", "creator": "DocBook XSL Stylesheets V1.79.1", "tota... |
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The long-term benefits of discounts are contrasted with organizational codes of ethics and conduct that
limit others from accepting discounts from your organization. The International Association of Chiefs of
Police’s Law Enforcement Code of Ethics limits the ability of police of... | {"creationdate": "2019-04-24T10:32:54-05:00", "file_type": ".pdf", "moddate": "2020-08-05T15:26:11-05:00", "title": "Principles of Accounting, Volume 1: Financial Accounting", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "producer": "Prince 11 (www.princexml.com)", "batch_upload": true,... |
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The World Customs Organization’s Model Code of Ethics and Conduct states that “customs employees are
called upon to use their best judgment to avoid situations of real or perceived conflict. In doing so, they
should consid... | {"total_pages": 1055, "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_name": "FinancialAccounting-OP.pdf", "batch_upload": true, "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "creationdate": "2019-04-24T10:32:54-05:00", "title": "Principles of Accounting... |
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code of conduct. As well, it might be illegal for the accountant’s employer to provide discounts to a
governmental organization’s employees. The professional accountant should always be aware of the
discount p... | {"batch_upload": true, "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_size_mb": 156.7, "moddate": "2020-08-05T15:26:11-05:00", "upload_timestamp": "2026-02-07T07:23:08.167529", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "source_file": "downloads\\busines... |
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... | refund, it is considered a sales allowance. The biggest difference is that a customer returns merchandise in a
sales return and keeps the merchandise in a sales allowance.
When a customer returns the merchandise, a retailer issues a credit memo to acknowledge the change in
contract and reduction to Accounts Receivab... | {"file_size_mb": 156.7, "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "title": "Principles of Accounting, Volume 1: Financial Accounting", "upload_timestamp": "2026-02-07T07:23:08.167529", "file_type": ".pdf", "uploaded_via": "batch_uploader", "producer": "Prince 11 (www.princexml.com... |
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Beyond recording the return, the retailer must also determine if the returned merchandise is in “sellable
condition.” An item is in sellable condition if the merchandise is good enough to warrant a sale to another
customer in the future. If so, the compan... | {"file_name": "FinancialAccounting-OP.pdf", "uploaded_via": "batch_uploader", "producer": "Prince 11 (www.princexml.com)", "file_size_mb": 156.7, "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "upload_timesta... |
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2
enforcement-code-of-ethics
3 World Customs Organization. Model Code of Ethics and Conduct. n.d. http://www.wcoomd.org/~/media/wco/public/global/pdf/topics/
integrity/instruments... | {"producer": "Prince 11 (www.princexml.com)", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_name": "FinancialAccounting-OP.pdf", "file_type": ".pdf", "batch_upload": true, "file_size_mb": 156.7, "creator": "DocBook XSL Stylesheets V1.79.1", "moddate": "2020-08-05T15:26:11-05:00", "uploa... |
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unsellable merchandise lost value.
Let’s say a customer purchases 300 plants on credit from a nursery for $3,000 (with a cost of $1,200). The first
entry reflects the initial sale by the nursery. The second entry ref... | {"file_name": "FinancialAccounting-OP.pdf", "batch_upload": true, "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "title": "Principles of Accounting, Volume 1: Financial Accounting", "total_pages": 1055, "upload_timestamp": "2026-02-07T07:23:08.167529", "source": "downloads\\business\\a... |
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would record the following entry for sales allowance associated with 100 plants.
378
Chapter 6 Merchandising Transactions
The nursery would also record a corresponding entry for the inventory and the cost of... | {"producer": "Prince 11 (www.princexml.com)", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "moddate": "2020-08-05T15:26:11-05:00", "title": "Principles of Accounting, Volume 1: Financial Accounting", "batch_upload": true, "uploaded_via": "batch_uploader", "file_name": "FinancialAccounting-OP... |
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combine returns and allowances into one account, but from a manager’s perspective, it may be easier to have
the accounts separated to make current determinations about inventory.
You may have noticed our discussion of c... | {"file_type": ".pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "title": "Principles of Accounting, Volume 1: Financial Accounting", "total_pages": 1055, "file_name": "FinancialAccounting-OP.pdf", "file_size_mb": 156.7, "batch_upload": true, "producer": "Prince 11 (www.princexml.c... |
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L I N K T O L E A R N I N G
Major retailers must find new ways to manage inventory and reduce operating cycles to stay competitive.
Companies such as Amazon.com Inc., have been able to reduce their operating ... | {"creator": "DocBook XSL Stylesheets V1.79.1", "file_name": "FinancialAccounting-OP.pdf", "batch_upload": true, "total_pages": 1055, "title": "Principles of Accounting, Volume 1: Financial Accounting", "creationdate": "2019-04-24T10:32:54-05:00", "file_size_mb": 156.7, "upload_timestamp": "2026-02-07T07:23:08.167529", ... |
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-0.034... | inventory system. Let’s look at the characteristics of these two systems.
Characteristics of the Perpetual and Periodic Inventory Systems
A perpetual inventory system automatically updates and records the inventory account every time a sale, or
purchase of inventory occurs. You can consider this “recording as you go... | {"creator": "DocBook XSL Stylesheets V1.79.1", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "upload_timestamp": "2026-02-07T07:23:08.167529", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "producer": "Prince 11 (www.princexml.com)", "source_file": "download... |
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inventory system uses a Purchases account to meet the requirements for recognition under GAAP. IFRS
requirements are very similar. The main difference is that assets are valued at net realizable value and can be... | {"creator": "DocBook XSL Stylesheets V1.79.1", "title": "Principles of Accounting, Volume 1: Financial Accounting", "uploaded_via": "batch_uploader", "upload_timestamp": "2026-02-07T07:23:08.167529", "file_type": ".pdf", "total_pages": 1055, "file_name": "FinancialAccounting-OP.pdf", "source": "downloads\\business\\acc... |
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-0.071022... | proper presentation of inventory in a company’s books leads to a number of accounting challenges, such
as:
• What method of accounting for inventory is appropriate?
• How often should inventory be counted?
• How will inventory in the books be valued?
•
•
Is any of the inventory obsolete and, if so, how will it b... | {"source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "uploaded_via": "batch_uploader", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "producer": "Prince 11 (www.princexml.com)", "upload_... |
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380
Chapter 6 Merchandising Transactions
goods were in transit (on a delivery truck for a sale just made, or en route to Gearhead). What is the
correct cost flow assumption for Gearhead to accurately account for inven... | {"source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_type": ".pdf", "upload_timestamp": "2026-02-07T07:23:08.167529", "creationdate": "2019-04-24T10:32:54-05:00", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "creator": "DocBook XSL Stylesheets V1.79.1", "file_... |
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Inventory Systems Comparison
There are some key differences between perpetual and periodic inventory systems. When a company uses the
perpetual inventory system and makes a purchase, they will automatically update the Merchandi... | {"source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "title": "Principles of Accounting, Volume 1: Financial Accounting", "creationdate": "2019-04-24T10:32:54-05:00", "upload_timestamp": "2026-02-07T07:23:08.167529", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "cre... |
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reported on the Income Statement under the perpetual inventory method.
A purchase return or allowance under perpetual inventory systems updates Merchandise Inventory for any
decreased cost. Under periodic inventory s... | {"source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "producer": "Prince 11 (www.princexml.com)", "creationdate": "2019-04-24T10:32:54-05:00", "upload_timestamp": "2026-02-07T07:23:08.167529", "total_pages": 1055, "moddate": "2020-08-05T15:26:11-05:00", "source_file": "downloads\\business\\accounti... |
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0.03563018515706062,
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0.0614074245095253,
-0.043575827... | for the discount amount. Under a periodic inventory system, Purchase Discounts (a temporary, contra
account), increases for the discount amount and Merchandise Inventory remains unchanged.
When a sale occurs under perpetual inventory systems, two entries are required: one to recognize the sale,
and the other to reco... | {"file_size_mb": 156.7, "title": "Principles of Accounting, Volume 1: Financial Accounting", "uploaded_via": "batch_uploader", "creator": "DocBook XSL Stylesheets V1.79.1", "total_pages": 1055, "file_name": "FinancialAccounting-OP.pdf", "producer": "Prince 11 (www.princexml.com)", "upload_timestamp": "2026-02-07T07:23:... |
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-0.0... | the sales return is recognized, but not the inventory condition entry.
382
Chapter 6 Merchandising Transactions
A sales allowance and sales discount follow the same recording formats for either perpetual or periodic
inventory systems.
Adjusting and Closing Entries for a Perpetual Inventory System
You have already... | {"file_type": ".pdf", "total_pages": 1055, "creator": "DocBook XSL Stylesheets V1.79.1", "upload_timestamp": "2026-02-07T07:23:08.167529", "file_name": "FinancialAccounting-OP.pdf", "producer": "Prince 11 (www.princexml.com)", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "batch_upload":... |
417b09b8-a1ee-4cf8-b6bc-8184cd475d92 | [
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0.010986625216901302,
0.027146734297275543,
-0.057... | inventory count requires companies to do a manual “stock-check” of inventory to make sure what they have
recorded on the books matches what they physically have in stock. Differences could occur due to
mismanagement, shrinkage, damage, or outdated merchandise. Shrinkage is a term used when inventory or
other assets ... | {"source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_name": "FinancialAccounting-OP.pdf", "moddate": "2020-08-05T15:26:11-05:00", "file_size_mb": 156.7, "producer": "Prince 11 (www.princexml.com)", "creationdate": "2019... |
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0.015807578340172768,
0.08642731606960297,
-0.045715946704149246,
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-... | Merchandise Inventory would need to be increased with a debit entry and the COGS would be reduced with a
credit entry. The adjusting entry is:
To sum up the potential adjustment process, after the merchandise inventory has been verified with a physical
count, its book value is adjusted upward or downward to reflect ... | {"file_size_mb": 156.7, "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "creator": "DocBook XSL Stylesheets V1.79.1", "batch_upload": true, "producer": "Prince 11 (www.princexml.com)", "upload_timestamp": "2026-02-07T07:23:08.167529", "moddate": "2020-08-05T15:26:11-05:00", "source_file": "down... |
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-0.025522049516439438,
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-0.... | Sales Discounts, Sales Returns and Allowances, and Cost of Goods Sold will close with the temporary debit
balance accounts to Income Summary.
Note that for a periodic inventory system, the end of the period adjustments require an update to COGS. To
determine the value of Cost of Goods Sold, the business will have to... | {"uploaded_via": "batch_uploader", "creator": "DocBook XSL Stylesheets V1.79.1", "batch_upload": true, "title": "Principles of Accounting, Volume 1: Financial Accounting", "upload_timestamp": "2026-02-07T07:23:08.167529", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_size_mb": 156.7, "p... |
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-0.051290... | Transaction
Perpetual Inventory System
Periodic Inventory System
Purchase of
Inventory
Record cost to Inventory account
Record cost to Purchases
account
Purchase Return
Record to update Inventory
Record to Purchase Returns and
or Allowance
Allowances
Purchase Discount
Record to update Inventory
Record to... | {"upload_timestamp": "2026-02-07T07:23:08.167529", "total_pages": 1055, "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "uploaded_via": "batch_uploader", "file_type": ".pdf", "file_size_mb": 156.7, "title": "Principles of Accounting, Volume 1: Financial Accounting", "batch_upload": true, "creat... |
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0.009682653471827507,
0.06223047524690628,
0.11364737153053284,
0.03007892519235611,
-0.015... | systems.
There are advantages and disadvantages to both the perpetual and periodic inventory systems.
C O N C E P T S I N P R A C T I C E
Point-of-Sale Systems
Advancements in point-of-sale (POS) systems have simplified the once tedious task of inventory
management. POS systems connect with inventory managemen... | {"source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "producer": "Prince 11 (www.princexml.com)", "creator": "DocBook XSL Stylesheets V1.79.1", "creationdate": "2019-04-24T10:32:54-05:00", "moddate": "2020-08-05T15:26:11-05:00", "total_pages": 1055, "file_type": ".pdf", "source_file": "downloads\\b... |
d47f4e2d-cc9a-4245-8b4e-8c14fdfce8a7 | [
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0.08368910104036331,
0.0769122764468193,
0.0507732592523098,
0.01977473683655262,
-0.05636... | inventory costs immediately. A business can easily create purchase orders, develop reports for cost of
goods sold, manage inventory stock, and update discounts, returns, and allowances. With this
application, customers have payment flexibility, and businesses can make present decisions to positively
affect growth.
... | {"uploaded_via": "batch_uploader", "creator": "DocBook XSL Stylesheets V1.79.1", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "moddate": "2020-08-05T15:26:11-05:00", "file_size_mb": 156.7, "batch_upload": true, "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6... |
d39db909-c069-4a3b-be6e-23c53a5e7323 | [
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-0.02043... | as it relates to inventory purchases, stocking, and sales. The information can be more robust, with exact
purchase costs, sales prices, and dates known. Although a periodic physical count of inventory is still required,
a perpetual inventory system may reduce the number of times physical counts are needed.
The bigge... | {"file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "moddate": "2020-08-05T15:26:11-05:00", "file_name": "FinancialAccounting-OP.pdf", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "total_pages": 1055, "source_file": "downloads\\business\\accounting\\FinancialAcc... |
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-0.03... | company may not have correct inventory stock and could make financial decisions based on incorrect data.
Advantages and Disadvantages of the Periodic Inventory System
The periodic inventory system is often less expensive and time consuming than perpetual inventory systems.
This is because there is no constant mainte... | {"moddate": "2020-08-05T15:26:11-05:00", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "creationdate": "2019-04-24T10:32:54-05:00", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "total_pages": 1055, "upload_timestamp": "2026-02-07T07:23:08.167529", "creator"... |
c54afb22-e6d7-4af4-84f3-152806142fd4 | [
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0.00... | stay on budget and control costs.
However, the need for frequent physical counts of inventory can suspend business operations each time this is
done. There are more chances for shrinkage, damaged, or obsolete merchandise because inventory is not
constantly monitored. Since there is no constant monitoring, it may be ... | {"file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "file_type": ".pdf", "file_name": "FinancialAccounting-OP.pdf", "title": "Principles of Accounting, Volume 1: Financial Accounting", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "total_pages": 1055, "modda... |
c32947a0-b22d-48d3-9491-584eb71832f8 | [
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-0.... | Appendix: Analyze and Record Transactions for Merchandise Purchases and Sales Using the Periodic Inventory
System discusses recognition under the periodic inventory system.)
T H I N K I T T H R O U G H
Comparing Inventory Systems
Your company uses a perpetual inventory system to control its operations. They onl... | {"producer": "Prince 11 (www.princexml.com)", "creator": "DocBook XSL Stylesheets V1.79.1", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_name": "FinancialAccounting-OP.pdf", "file_size_mb": 156.7, "uploaded_via":... |
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... | the future? Would a change in inventory systems benefit the company? Are you constrained by any
resources?
6.3 Analyze and Record Transactions for Merchandise Purchases Using the
Perpetual Inventory System
The following example transactions and subsequent journal entries for merchandise purchases are recognized
us... | {"moddate": "2020-08-05T15:26:11-05:00", "file_type": ".pdf", "creator": "DocBook XSL Stylesheets V1.79.1", "upload_timestamp": "2026-02-07T07:23:08.167529", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_name": "FinancialAccounting-OP.pdf", "batch_upload": true, "source_file": "download... |
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0.01610608585178852,
0.060383833944797516,
-0.024967124685645103,
0.03833158686757088,
-0... | Figure 6.9) contains a desktop computer, tablet computer, landline telephone, and a 4-in-1 desktop printer
with a printer, copier, scanner, and fax machine.
Figure 6.9
California Business Solutions. Providing businesses electronic hardware solutions. (credit:
modification of “Professionnal desk” by “reynermedia”/Fl... | {"title": "Principles of Accounting, Volume 1: Financial Accounting", "producer": "Prince 11 (www.princexml.com)", "creationdate": "2019-04-24T10:32:54-05:00", "file_size_mb": 156.7, "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_name": "FinancialAccounting-OP.pdf", "file_type": ".p... |
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0.04138824716210365,
-0.06859338283538818,
-0.008419002406299114,
-0.09... | hand to pay immediately with cash. The following entry occurs.
Merchandise Inventory-Packages increases (debit) for 6,200 ($620 × 10), and Cash decreases (credit) because
the company paid with cash. It is important to distinguish each inventory item type to better track inventory
needs.
On April 7, CBS purchases 30... | {"file_name": "FinancialAccounting-OP.pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "producer": "Prince 11 (www.princexml.com)", "upload_timestamp": "2026-02-07T07:23:08.167529", "creator": "DocBook XSL Stylesheets V1.79.1", "moddate": "2020-08-05T15:26:11-05:00", "source": "dow... |
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0.04917424917221069,
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-0.017468562349677086,
0.009268052875995636,
-0.06... | Accounts Payable decreases (debit), and Cash decreases (credit) for the full amount owed. The credit terms
were n/15, which is net due in 15 days. No discount was offered with this transaction. Thus the full payment of
$12,000 occurs.
Purchase Discount Transaction Journal Entries
On May 1, CBS purchases 67 tablet c... | {"title": "Principles of Accounting, Volume 1: Financial Accounting", "creationdate": "2019-04-24T10:32:54-05:00", "upload_timestamp": "2026-02-07T07:23:08.167529", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "total_pages": 1055, "file_type": ".pdf", "source_file": "downloads\\business\\acc... |
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0.07732081413269043,
-0.03194822743535042,
0.009629343636333942,
-0.02978... | their account to receive a 5% discount on their purchase.
On May 10, CBS pays their account in full. The following entry occurs.
Accounts Payable decreases (debit) for the original amount owed of $4,020 before any discounts are taken.
Since CBS paid on May 10, they made the 10-day window and thus received a discount... | {"upload_timestamp": "2026-02-07T07:23:08.167529", "uploaded_via": "batch_uploader", "moddate": "2020-08-05T15:26:11-05:00", "file_size_mb": 156.7, "file_name": "FinancialAccounting-OP.pdf", "file_type": ".pdf", "batch_upload": true, "creator": "DocBook XSL Stylesheets V1.79.1", "total_pages": 1055, "source_file": "dow... |
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-0.12... | outside of the discount window but within the total allotted timeframe for payment. CBS does not receive a
discount in this case but does pay in full and on time.
Purchase Returns and Allowances Transaction Journal Entries
On June 1, CBS purchased 300 landline telephones with cash at a cost of $60 each. On June 3, C... | {"file_name": "FinancialAccounting-OP.pdf", "file_type": ".pdf", "file_size_mb": 156.7, "moddate": "2020-08-05T15:26:11-05:00", "uploaded_via": "batch_uploader", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "producer": "Prince 11 (www.princexml.com)", "upload_timestamp": "2026-02-07T07:... |
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0.006410881876945496,
0.06046794354915619,
-0.06220... | decreases (credit) Merchandise Inventory-Phones because the merchandise has been returned to the
manufacturer or supplier.
On June 8, CBS discovers that 60 more phones from the June 1 purchase are slightly damaged. CBS decides to
keep the phones but receives a purchase allowance from the manufacturer of $8 per phone... | {"source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "creator": "DocBook XSL Stylesheets V1.79.1", "batch_upload": true, "total_pages": 1055, "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "uploaded_via": "batch_uploader", "file_type": ".pdf", "file_name": "FinancialA... |
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0.010702328756451607,
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-0.04443298... | and returns them to the manufacturer for a full refund. The following entries show the purchase and
subsequent return.
Both Merchandise Inventory-Printers increases (debit) and Accounts Payable increases (credit) by $8,000 ($100
× 80).
390
Chapter 6 Merchandising Transactions
Both Accounts Payable decreases (debi... | {"file_name": "FinancialAccounting-OP.pdf", "total_pages": 1055, "upload_timestamp": "2026-02-07T07:23:08.167529", "moddate": "2020-08-05T15:26:11-05:00", "producer": "Prince 11 (www.princexml.com)", "title": "Principles of Accounting, Volume 1: Financial Accounting", "batch_upload": true, "source": "downloads\\busines... |
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0.03740835562348366,
0.024596039205789566,
0.0578460693359375,
-0.00398280331864953,
0.030712801963090897,
0.06956571340560913,
-0.022815734148025513,
0.024932842701673508,
-0.030... | allowance.
Both Accounts Payable decreases (debit) and Merchandise Inventory-Printers decreases (credit) by $120 (4 ×
$30). The purchase was on credit and the allowance occurred before payment, thus decreasing Accounts
Payable. Merchandise Inventory decreases due to the loss in value of the merchandise.
On July 15,... | {"file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "creationdate": "2019-04-24T10:32:54-05:00", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_name": "FinancialAccounting-OP.pdf", "batch_upload": true, "uploaded_via": "batch_uploader", "total_pages": 1... |
242aea11-0a3d-4ff7-8ee1-33284e5d0673 | [
0.0003543986822478473,
0.0805337131023407,
-0.014432689175009727,
0.0012847431935369968,
0.026430824771523476,
0.04361579194664955,
-0.005992228165268898,
0.06899815797805786,
0.041053466498851776,
0.028262732550501823,
0.06502503156661987,
0.022042399272322655,
0.07684822380542755,
-0.001... | Principle, reporting the value of the merchandise at the reduced cost.
Summary of Purchase Transaction Journal Entries
The chart in Figure 6.10 represents the journal entry requirements based on various merchandising purchase
transactions using the perpetual inventory system.
This OpenStax book is available for fre... | {"moddate": "2020-08-05T15:26:11-05:00", "creationdate": "2019-04-24T10:32:54-05:00", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "creator": "DocBook XSL Stylesheets V1.79.1", "uploaded_via": "batch_uploader", "batch_upload": true, "file_type": ".pdf", "source": "downloads\\business... |
57fe4dc1-57de-4741-bf7f-80259891ec7a | [
-0.059784289449453354,
0.01731095276772976,
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-0.009221665561199188,
-0.05392388254404068,
0.050565604120492935,
0.05334339663386345,
0.030554644763469696,
0.06267326325178146,
0.04268651083111763,
0.0708371177315712,
0.006379086524248123,
0.04431061074137688,
-0.05970... | merchandise. In this circumstance, an adjustment is recorded to inventory to account for the differences
between the physical count and the amount represented on the books.
Y O U R T U R N
Recording a Retailer’s Purchase Transactions
Record the journal entries for the following purchase transactions of a retailer... | {"total_pages": 1055, "title": "Principles of Accounting, Volume 1: Financial Accounting", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "upload_timestamp": "2026-02-07T07:23:08.167529", "producer": "Prince 11 (www.princexml.com)", "file_type": ".pdf", "creationdate": "2019-04-24T10:32:54-05:... |
fc918c54-6576-410a-8766-bb596b2a0127 | [
-0.027508700266480446,
0.03904031589627266,
-0.04877842962741852,
-0.06626340001821518,
-0.06510825455188751,
0.02800809033215046,
0.04328031465411186,
0.02343755029141903,
0.020481577143073082,
-0.00820703711360693,
0.06736677885055542,
0.017190702259540558,
0.0468614399433136,
-0.0396040... | fundamentals of accounting topics. Check out Bean Counter (https://openstax.org/l/50BeanCounter) to
see what you can learn.
6.4 Analyze and Record Transactions for the Sale of Merchandise Using the
Perpetual Inventory System
The following example transactions and subsequent journal entries for merchandise sales are... | {"title": "Principles of Accounting, Volume 1: Financial Accounting", "file_type": ".pdf", "upload_timestamp": "2026-02-07T07:23:08.167529", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "producer": "Prince 11 (www.princexml.com)", "batch_upload": true, "file_hash": "89738e550d63820fbb3a833d1... |
0b7b1a1d-fed2-473a-a388-c5c1d2bb7548 | [
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0.03584896773099899,
0.09944195300340652,
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0.0007091062143445015,
0.011878377757966518,
-0.02078176848590374,
0.020856114104390144,
-0.... | landline telephone, and a 4-in-1 printer. CBS sells each hardware package for $1,200. They offer their
customers the option of purchasing extra individual hardware items for every electronic hardware package
purchase. Figure 6.11 lists the products CBS sells to customers; the prices are per-package, and per unit.
Th... | {"source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "upload_timestamp": "2026-02-07T07:23:08.167529", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "moddate": "2020-08-05T15:26:11-05:00", "creationdate": "2019-04-24T10:32:54-05:00", "total_pages": 1055, "producer": ... |
74825445-d399-4983-81c6-43d8bcd7942f | [
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0.03646710142493248,
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0.01583072543144226,
0.07609828561544418,
0.03924407437443733,
0.02801864966750145,
0.04645572975277901,
-0.07810315489768982,
0.04284480959177017,
-0.09779607... | customer pays immediately with cash. The following entries occur.
In the first entry, Cash increases (debit) and Sales increases (credit) for the selling price of the packages,
$12,000 ($1,200 × 10). In the second entry, the cost of the sale is recognized. COGS increases (debit) and
Merchandise Inventory-Packages de... | {"producer": "Prince 11 (www.princexml.com)", "creator": "DocBook XSL Stylesheets V1.79.1", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "creationdate": "2019-04-24T10:32:54-05:00", "file_size_mb": 156.7, "file_... |
3b762734-d86b-4d40-b549-a3207bf0ba40 | [
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0.04368286207318306,
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0.003950890619307756,
0.04838070645928383,
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0.05960797891020775,
0.11396274715662003,
-0.03900670260190964,
0.028709201142191887,
-0.05150... | Merchandise Inventory-Desktop Computers decreases (credit), and COGS increases (debit) for the cost of the
computers, $8,000 ($400 × 20).
On July 17, the customer makes full payment on the amount due from the July 7 sale. The following entry
occurs.
394
Chapter 6 Merchandising Transactions
Accounts Receivable dec... | {"file_size_mb": 156.7, "producer": "Prince 11 (www.princexml.com)", "upload_timestamp": "2026-02-07T07:23:08.167529", "uploaded_via": "batch_uploader", "total_pages": 1055, "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "title": "Principles of Accounting, Volume 1: Financial Accounting", "fil... |
fb3b3c72-4f0b-46f9-9c09-6e38e42e507d | [
-0.10315247625112534,
0.05969209596514702,
0.03579483553767204,
-0.09050153940916061,
-0.037963397800922394,
-0.0011803139932453632,
-0.01309777982532978,
0.09232708811759949,
0.05170222744345665,
0.02688189223408699,
0.07621066272258759,
-0.015434655360877514,
0.006759107578545809,
-0.051... | credit terms are a little different than the earlier example. These credit terms include a discount opportunity
(2/10), meaning the customer has 10 days from the invoice date to pay on their account to receive a 2%
discount on their purchase. In the second entry, COGS increases (debit) and Merchandise Inventory–Table... | {"source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "title": "Principles of Accounting, Volume 1: Financial Accounting", "creator": "DocBook XSL Stylesheets V1.79.1", "source": "downloads\\business\\accounting\\F... |
51621d7c-462a-4aca-9bab-0dbbda0c5750 | [
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0.025360332801938057,
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0.04428654536604881,
0.07317018508911133,
0.03730998933315277,
0.07900053262710571,
-0.05996... | owed, before discount. Sales Discounts will reduce Sales at the end of the period to produce net sales.
Let’s take the same example sale with the same credit terms, but now assume the customer paid their account
on August 25. The following entry occurs.
This OpenStax book is available for free at http://cnx.org/cont... | {"source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "creator": "DocBook XSL Stylesheets V1.79.1", "moddate": "2020-08-05T15:26:11-05:00", "file_name": "FinancialAccounting-OP.pdf", "uploaded_via": "batch_uploader", "f... |
bbbf55d8-5662-4220-a042-131e9d6b610b | [
-0.07414331287145615,
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-0.008674999698996544,
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0.039722979068756104,
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0.029696399345993996,
0.004493453539907932,
0.05567757785320282,
-0.006704392377287149,
0.03333396092057228,
-0.1109... | Jan. 5
Sold $2,450 of merchandise on credit (cost of $1,000), with terms 2/10, n/30, and invoice
dated January 5.
Jan. 9
The customer returned $500 worth of slightly damaged merchandise to the retailer and
received a full refund. The retailer returned the merchandise to its inventory at a cost of
$130.
Jan. 14
... | {"file_size_mb": 156.7, "creator": "DocBook XSL Stylesheets V1.79.1", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_name": "FinancialAccounting-OP.pdf", "batch_upload": true, "creationdate": "2019-04-24T10:32:54-05:00", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f... |
7d2a57c3-0b03-4356-ab0b-c076b9bb3003 | [
-0.08901858329772949,
0.008989406749606133,
0.065823033452034,
-0.12845489382743835,
-0.05478906258940697,
0.028434397652745247,
0.027135206386446953,
0.07952740043401718,
-0.003180569503456354,
0.02574331685900688,
0.07733552157878876,
-0.04571455344557762,
0.004282916430383921,
-0.100369... | In the first entry on September 1, Cash increases (debit) and Sales increases (credit) by $37,500 (250 × $150),
the sales price of the phones. In the second entry, COGS increases (debit), and Merchandise Inventory-Phones
decreases (credit) by $15,000 (250 × $60), the cost of the sale.
Since the customer already paid... | {"creationdate": "2019-04-24T10:32:54-05:00", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_name": "FinancialAccounting-OP.pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "file_size_mb": 156.7, "file_type": ".pdf", "upload_timestamp": "2026-02... |
8d6747e1-9d76-4dfa-8f6b-62a5724d1c17 | [
-0.05256185308098793,
0.05956113338470459,
0.04809029772877693,
-0.08696045726537704,
-0.026563983410596848,
0.03567230701446533,
0.01770174689590931,
0.06503713130950928,
-0.02839914709329605,
0.005867798812687397,
0.09137630462646484,
0.018275061622262,
0.061440303921699524,
-0.086225606... | damaged. The customer decides to keep the phones but receives a sales allowance from CBS of $10 per
phone. The following entry occurs for the allowance.
Since the customer already paid in full for their purchase, a cash refund of the allowance is issued in the
amount of $200 (20 × $10). This increases (debit) Sales ... | {"batch_upload": true, "moddate": "2020-08-05T15:26:11-05:00", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "uploaded_via": "batch_uploader", "upload_timestamp": "2026-02-07T07:23:08.167529", "file_type": ".pdf", "... |
da6328c2-d116-4697-baa9-2008296e6549 | [
-0.051694825291633606,
0.010564516298472881,
0.007367572747170925,
-0.05027490854263306,
-0.039333418011665344,
0.05093146115541458,
-0.01242191344499588,
0.06135202944278717,
-0.023295391350984573,
0.0048922086134552956,
0.07412021607160568,
-0.020067164674401283,
-0.008929016068577766,
-... | full refund. CBS returns the printers to their inventory at the original cost. The following entries show the sale
and subsequent return.
In the first entry on October 1, Accounts Receivable increases (debit) and Sales increases (credit) by $19,250
(55 × $350), the sales price of the printers. Accounts Receivable is... | {"source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_type": ".pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "moddate": "2020-08-05T15:26:11-05:00", "creationdate": "2019-04-24T10:32:54-05:00", "batch_upload": true, "file_size_mb": 156.7, "source":... |
f8f7590a-19be-407f-ac01-33cd466f6d59 | [
-0.0359756201505661,
0.06012251600623131,
0.03656451404094696,
-0.06718215346336365,
0.013676396571099758,
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-0.05452950671315193,
0.002623567823320627,
0.09542982280254364,
-0.0240559633821249,
0.019875219091773033,
-0.06873910... | merchandise is in sellable condition at its original cost. Merchandise Inventory–Printers increases (debit) and
COGS decreases (credit) by $1,000 (10 × $100).
On October 10, the customer discovers that 5 printers from the October 1 purchase are slightly damaged, but
decides to keep them, and CBS issues an allowance ... | {"creator": "DocBook XSL Stylesheets V1.79.1", "file_type": ".pdf", "batch_upload": true, "moddate": "2020-08-05T15:26:11-05:00", "creationdate": "2019-04-24T10:32:54-05:00", "title": "Principles of Accounting, Volume 1: Financial Accounting", "total_pages": 1055, "producer": "Prince 11 (www.princexml.com)", "source": ... |
42f72c79-ae56-4693-8b9f-6efae50664c2 | [
-0.02092599682509899,
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-0.008679777383804321,
0.07866694033145905,
0.0032751027029007673,
0.029397642239928246,
0.06333625316619873,
-0.02285434864461422,
0.004115313291549683,
-0.0... | On October 15, the customer pays their account in full, less sales returns and allowances. The following
payment entry occurs.
398
Chapter 6 Merchandising Transactions
Accounts Receivable decreases (credit) for the original amount owed, less the return of $3,500 and the
allowance of $300 ($19,250 – $3,500 – $300).... | {"file_type": ".pdf", "upload_timestamp": "2026-02-07T07:23:08.167529", "producer": "Prince 11 (www.princexml.com)", "creator": "DocBook XSL Stylesheets V1.79.1", "file_name": "FinancialAccounting-OP.pdf", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "title": "Principles of Accounting, ... |
3f42ff47-71cb-41dc-a9d9-28cd3b47ec7a | [
-0.03195389360189438,
0.09528171271085739,
0.03309100121259689,
-0.04364060238003731,
0.031877197325229645,
0.01981673389673233,
0.04543996602296829,
0.03865101933479309,
-0.015791025012731552,
0.02792450599372387,
0.09621382504701614,
-0.020156387239694595,
0.08664166182279587,
-0.0404134... | transactions.
Figure 6.12
Journal Entry Requirements for Merchandise Sales Transaction. (attribution: Copyright Rice
University, OpenStax, under CC BY-NC-SA 4.0 license)
This OpenStax book is available for free at http://cnx.org/content/col25448/1.4
Chapter 6 Merchandising Transactions
399
Y O U R T U R N
Rec... | {"batch_upload": true, "creator": "DocBook XSL Stylesheets V1.79.1", "moddate": "2020-08-05T15:26:11-05:00", "file_name": "FinancialAccounting-OP.pdf", "file_type": ".pdf", "creationdate": "2019-04-24T10:32:54-05:00", "uploaded_via": "batch_uploader", "source_file": "downloads\\business\\accounting\\FinancialAccounting... |
2e7fdadd-af19-4a29-981a-3c0c5695df93 | [
-0.05686291679739952,
0.0006469832151196897,
0.013475320301949978,
-0.019882362335920334,
0.059067677706480026,
0.025384247303009033,
0.025723421946167946,
0.024063028395175934,
-0.02828650362789631,
0.04234163835644722,
0.08848019689321518,
-0.014484118670225143,
-0.02153143845498562,
0.0... | allowance from the retailer of $230.
May 20
The customer paid the account in full, less the return and allowance.
Solution
400
Chapter 6 Merchandising Transactions
6.5 Discuss and Record Transactions Applying the Two Commonly Used
Freight-In Methods
When you buy merchandise online, shipping charges are usually ... | {"uploaded_via": "batch_uploader", "total_pages": 1055, "creationdate": "2019-04-24T10:32:54-05:00", "file_type": ".pdf", "file_size_mb": 156.7, "file_name": "FinancialAccounting-OP.pdf", "upload_timestamp": "2026-02-07T07:23:08.167529", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "sou... |
29f9ea9c-95c2-4248-a6da-856e05f5ded2 | [
-0.029909886419773102,
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0.02369966357946396,
0.004295330960303545,
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0.04101897031068802,
0.053974300622940063,
0.008070014417171478,
0.0518006905913353,
0.07705333828926086,
-0.019675446674227715,
-0.004862071946263313,
0.03676... | inventory system to track purchases and sales of inventory. While the tracking systems do not differ
between the two methods, they have differences in when sales transactions are reported. If goods are
shipped FOB shipping point, under IFRS, the total selling price of the item would be allocated between
the item sol... | {"uploaded_via": "batch_uploader", "total_pages": 1055, "upload_timestamp": "2026-02-07T07:23:08.167529", "creationdate": "2019-04-24T10:32:54-05:00", "moddate": "2020-08-05T15:26:11-05:00", "producer": "Prince 11 (www.princexml.com)", "file_size_mb": 156.7, "source_file": "downloads\\business\\accounting\\FinancialAcc... |
4ee1bd7c-871b-4461-9c50-541397f9bc18 | [
-0.05250035971403122,
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-0.03224346041679382,
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0.0341276116669178,
-0.004588010720908642,
0.0804140642285347,
0.012379223480820656,
0.052285756915807724,
0.06091412901878357,
0.0056223394349217415,
-0.005277485121041536,
0.0429... | GAAP.
Example
Wally’s Wagons sells and ships 20 deluxe model wagons to Sam’s Emporium for $5,000. Assume $400 of
the total costs represents the costs of shipping the wagons and consider these two scenarios: (1) the
wagons are shipped FOB shipping point or (2) the wagons are shipped FOB destination. If Wally’s is
a... | {"uploaded_via": "batch_uploader", "file_size_mb": 156.7, "file_type": ".pdf", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "upload_timestamp": "2026-02-07T07:23:08.167529", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "file_name": "FinancialAccounting-OP.... |
cd24437b-28b1-4b6a-8d50-8d256a300581 | [
-0.0010769349755719304,
0.056024666875600815,
-0.052766285836696625,
0.03805484622716904,
0.048798155039548874,
0.005280953831970692,
0.0007413551793433726,
0.06261548399925232,
-0.004051646683365107,
0.01813896745443344,
0.06001105159521103,
0.014432600699365139,
0.0034252433106303215,
0.... | latter case, Wally’s would record Sales Revenue of $5,000 at the time the wagons are shipped and $400 as
This OpenStax book is available for free at http://cnx.org/content/col25448/1.4
Chapter 6 Merchandising Transactions
401
shipping expense at the time of shipping. Notice that in both cases, the total net revenue... | {"file_type": ".pdf", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "moddate": "2020-08-05T15:26:11-05:00", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_name": "FinancialAcc... |
c7956a4c-aba4-4aa7-95f7-c0ab45b937b5 | [
-0.011004115454852581,
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0.002997507806867361,
-0.10187988728284836,
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0.05246870... | by Sam’s emporium.
Financial Statement Presentation of Cost of Goods Sold
IFRS allows greater flexibility in the presentation of financial statements, including the income statement.
Under IFRS, expenses can be reported in the income statement either by nature (for example, rent,
salaries, depreciation) or by funct... | {"file_size_mb": 156.7, "producer": "Prince 11 (www.princexml.com)", "batch_upload": true, "moddate": "2020-08-05T15:26:11-05:00", "file_name": "FinancialAccounting-OP.pdf", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "creationdate": "2019-04-24T10:32:54-05:00", "file_hash": "89738e550d6382... |
67d5e4d0-824f-47a3-9860-e537a0762a10 | [
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0.012... | when determining who pays for shipping, and how it is recognized in merchandising transactions. The
establishment of a transfer point and ownership indicates who pays the shipping charges, who is responsible
for the merchandise, on whose balance sheet the assets would be recorded, and how to record the transaction
f... | {"uploaded_via": "batch_uploader", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "file_size_mb": 156.7, "file_type": ".pdf", "total_pages": 1055, "upload_timestamp": "2026-02-07T07:23:08.167529", "moddate": "2020... |
e3cb0ad5-1e90-443b-85e0-c4a9b1fafc4c | [
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0.04072645306587219,
0.07520650327205658,
-0.04468218982219696,
0.03962699696421623,
0.00243... | the goods are in their possession. Goods in transit refers to the time in which the merchandise is transported
from the seller to the buyer (by way of delivery truck, for example). One party is responsible for the goods in
transit and the costs associated with transportation. Determining whether this responsibility l... | {"uploaded_via": "batch_uploader", "creator": "DocBook XSL Stylesheets V1.79.1", "creationdate": "2019-04-24T10:32:54-05:00", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "batch_upload": true, "moddate": "2020-08-05T15:26:11-05:00", "source": "downloads\\business\\accounting\\FinancialA... |
851754c3-697b-4fc8-8a32-5e4fd2301c84 | [
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-0.04870815947651863,
0.0004806577926501632,
-0.056... | ready for sale from the buyer’s perspective. The shipping expenses are held in inventory until sold, which
means these costs are reported on the balance sheet in Merchandise Inventory. When the merchandise is
sold, the shipping charges are transferred with all other inventory costs to Cost of Goods Sold on the income... | {"upload_timestamp": "2026-02-07T07:23:08.167529", "file_size_mb": 156.7, "moddate": "2020-08-05T15:26:11-05:00", "creator": "DocBook XSL Stylesheets V1.79.1", "uploaded_via": "batch_uploader", "total_pages": 1055, "file_type": ".pdf", "file_name": "FinancialAccounting-OP.pdf", "file_hash": "89738e550d63820fbb3a833d14a... |
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-0.011480... | inventory.
Freight-out refers to the costs for which the seller is responsible when shipping to a buyer, such as delivery
and insurance expenses. When the seller is responsible for shipping costs, they recognize this as a delivery
expense. The delivery expense is specifically associated with selling and not daily op... | {"title": "Principles of Accounting, Volume 1: Financial Accounting", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "total_pages": 1055, "creator": "DocBook XSL Stylesheets V1.79.1", "moddate": "2020-08-05T15:26:11-05:00", "source_file": "downloads\\business\\accounting\\FinancialAcco... |
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-0.022... | income statement, this $100 delivery expense will be grouped with Selling and Administrative expenses.
L I N K T O L E A R N I N G
Shipping term agreements provide clarity for buyers and sellers with regards to inventory
responsibilities. Use the animation on FOB Shipping Point and FOB Destination (https://opens... | {"file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "file_name": "FinancialAccounting-OP.pdf", "creator": "DocBook XSL Stylesheets V1.79.1", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "moddate": "2020-08-05T15:26:11-05:00", "source": "downloads\\business\... |
658f1d08-cf59-4762-9564-30cf54e8e2c0 | [
0.019763803109526634,
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0.035056766122579575,
0.021078772842884064,
-0.08253256231546402,
0.024104032665491104,
-0.... | This OpenStax book is available for free at http://cnx.org/content/col25448/1.4
Chapter 6 Merchandising Transactions
403
incorporates more than simply the point at which responsibility transfers. There are two FOB considerations:
FOB Destination and FOB Shipping Point.
If FOB destination point is listed on the pur... | {"producer": "Prince 11 (www.princexml.com)", "moddate": "2020-08-05T15:26:11-05:00", "file_type": ".pdf", "title": "Principles of Accounting, Volume 1: Financial Accounting", "uploaded_via": "batch_uploader", "upload_timestamp": "2026-02-07T07:23:08.167529", "creationdate": "2019-04-24T10:32:54-05:00", "file_size_mb":... |
9f5d0049-50e1-4626-9a28-47173e3485f0 | [
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0.07690151035785675,
0.043035805225372314,
-0.10428765416145325,
0.0014243705663830042,
-0.03... | as cash directly to the delivery service. The following entries occur.
Accounts Receivable (debit) and Sales (credit) increases for the amount of the sale (30 × $150). Cost of Goods
Sold increases (debit) and Merchandise Inventory decreases (credit) for the cost of sale (30 × $60). Delivery
Expense increases (debit)... | {"uploaded_via": "batch_uploader", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "creationdate": "2019-04-24T10:32:54-05:00", "upload_timestamp": "2026-02-07T07:23:08.167529", "moddate": "2020-08-05T15:26:11-05:00", "total_pages": 1055, "title": "Principles of Accounting, Volume 1: Financial ... |
3086725d-4dbc-48b4-bb47-a8c7119df372 | [
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0.0857696682214737,
0.04797234758734703,
-0.07160790264606476,
-0.02020944282412529,
-0.02861... | Shipping Point. The shipping charges amount to an extra $5 per tablet computer. All other taxes, fees, and
insurance are included in the purchase price of $60. The following entry occurs to recognize the purchase.
Merchandise Inventory increases (debit) and Accounts Payable increases (credit) by the amount of the
pu... | {"uploaded_via": "batch_uploader", "upload_timestamp": "2026-02-07T07:23:08.167529", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "moddate": "2020-08-05T15:26:11-05:00", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_name": "FinancialAccounting-OP.pdf"... |
b5a699db-71a2-41c3-9f55-0e8c472a813e | [
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0.02027968317270279,
0.0035464668180793524,
-0.07160843908786774,
-0.07451900839805603,
-0.02... | standard contract requires an FOB Shipping Point term, leaving the buyer with the responsibility for
goods in transit and shipping charges. One of your long-term customers asks if you can change the
terms to FOB Destination to help them save money.
Do you change the terms, why or why not? What positive and negative ... | {"batch_upload": true, "producer": "Prince 11 (www.princexml.com)", "creationdate": "2019-04-24T10:32:54-05:00", "file_name": "FinancialAccounting-OP.pdf", "file_type": ".pdf", "title": "Principles of Accounting, Volume 1: Financial Accounting", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pd... |
3bf10111-8eab-4549-a278-db096d776fa9 | [
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-0.012160289101302624,
-0.0015675130998715758,
-0.043004266917705536,
0.01203010231256485,
-0.050... | company could prepare the statement using a multi-step format or a simple format (also known as a single-
step format). Companies must decide the format that best fits their needs.
This OpenStax book is available for free at http://cnx.org/content/col25448/1.4
Chapter 6 Merchandising Transactions
405
Figure 6.15 M... | {"batch_upload": true, "producer": "Prince 11 (www.princexml.com)", "creator": "DocBook XSL Stylesheets V1.79.1", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "file_size_mb": 156.7, "creationdate": "2019-04-24T10:32:54-05:00", "uploaded_via": "batch_uploader", "upload_timestamp": "20... |
f9a51dc1-1606-42b9-802e-26279b50151c | [
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-0.0036857856903225183,
0.04971092939376831,
-0.014201522804796696,
0.012781213968992233,
-0... | statement separates cost of goods sold from operating expenses and deducts cost of goods sold from net
sales to obtain a gross margin.
Operating expenses are daily operational costs not associated with the direct selling of products or services.
Operating expenses are broken down into selling expenses (such as adver... | {"batch_upload": true, "producer": "Prince 11 (www.princexml.com)", "file_name": "FinancialAccounting-OP.pdf", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "total_pages": 1055, "creationdate": "2019-04-24T10:32:54-05:00", "source_file": "downloads\\business\\accounting\\FinancialAccounting-O... |
9c810ff2-0851-4ec8-93cd-19b4ce954fd7 | [
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0.0013834532583132386,
-0.001196986879222095,
-0.06361941248178482,
0.038422591984272,
-0.066... | losses on sales of assets (buildings, equipment, and machinery), and interest expense. Other revenue and
expenses added to (or deducted from) income from operations produces net income (loss).
A simple income statement is less detailed than the multi-step format. A simple income statement combines
all revenues into ... | {"batch_upload": true, "producer": "Prince 11 (www.princexml.com)", "uploaded_via": "batch_uploader", "title": "Principles of Accounting, Volume 1: Financial Accounting", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf"... |
d79cfad3-419e-465f-8eba-7ea53ab41110 | [
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0.0026452047750353813,
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-0... | statements prepared are using a perpetual inventory system.
406
Chapter 6 Merchandising Transactions
The following is the multi-step income statement for CBS.
Demonstration of the Simple Income Statement Format
We will use the same adjusted trial balance information for CBS but will now create a simple income
sta... | {"file_name": "FinancialAccounting-OP.pdf", "creationdate": "2019-04-24T10:32:54-05:00", "uploaded_via": "batch_uploader", "file_type": ".pdf", "creator": "DocBook XSL Stylesheets V1.79.1", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "moddate": "2020-08-05T15:26:11-05:00", "total_pa... |
185148d1-3e60-4f1c-809a-3858895e92f9 | [
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-0.008404342457652092,
0.0011569543275982141,
-0.0344238318502903,
-0.03470001369714737,
-0.059... | simple income statement might be more appropriate for external use, as a summary for investors and lenders.
From the information obtained on the income statement, a company can make decisions related to growth
strategies. One ratio that can help them in this process is the Gross Profit Margin Ratio. The gross profit
... | {"file_type": ".pdf", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "batch_upload": true, "upload_timestamp": "2026-02-07T07:23:08.167529", "file_name": "FinancialAccounting-OP.pdf", "file_size_mb": 156.7, "creation... |
3410c1dc-50b8-4d48-be7c-787e515af4a8 | [
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0.006942505016922951,
-0.0023127347230911255,
-0.04878096282482147,
-0.0351090207695961,
-0.03... | has a margin of 39% to cover operating expenses and profit.
Gross profit margin ratio =
⎛
⎝$293,500 – $180,000⎞
$293,500
⎠
= 0.39, or 39%
T H I N K I T T H R O U G H
Which Income Statement Format Do I Choose?
You are an accountant for a small retail store and are tasked with determining the best presentatio... | {"batch_upload": true, "creationdate": "2019-04-24T10:32:54-05:00", "file_name": "FinancialAccounting-OP.pdf", "moddate": "2020-08-05T15:26:11-05:00", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "producer": "Prince 11 (www.princexml.com)", "upload_timestamp": "2026-02-07T07:23:08.16... |
22c776c5-47c0-4ca9-a7e3-8b3503a7f21d | [
0.03849371150135994,
0.08014428615570068,
-0.009110771119594574,
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0.07382454723119736,
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-0.02422867901623249,
0.04686485230922699,
-0.04693327099084854,
-0.007702440023422241,
-0.0535... | format? What are the benefits and challenges of your statement choice for each stakeholder group?
L I N K T O L E A R N I N G
Target Brands, Inc. is an international retailer providing a variety of resale products to consumers. Target
uses a multi-step income statement format found at Target Brands, Inc. annual ... | {"upload_timestamp": "2026-02-07T07:23:08.167529", "uploaded_via": "batch_uploader", "total_pages": 1055, "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "title": "Principles of Accounting, Volume 1: Financial Accounting", "producer": "Prince 11 (www.princexml.com)", "creator": "DocBook XS... |
bb802bc9-fe20-4935-97b0-ae935568e9dc | [
-0.015812784433364868,
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-0.05416688323020935,
0.10475805401802063,
-0.020655769854784012,
0.05126957967877388,
-0.033... | will look at some of the common situations that occur with merchandising companies and how these
transactions are reported using the periodic inventory system.
Merchandise Purchases
The following example transactions and subsequent journal entries for merchandise purchases are recognized
using a periodic inventory ... | {"title": "Principles of Accounting, Volume 1: Financial Accounting", "producer": "Prince 11 (www.princexml.com)", "creator": "DocBook XSL Stylesheets V1.79.1", "upload_timestamp": "2026-02-07T07:23:08.167529", "file_name": "FinancialAccounting-OP.pdf", "source_file": "downloads\\business\\accounting\\FinancialAccounti... |
1013aefb-6cd6-4e3b-bdcf-7dfa16585e28 | [
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0.03444230183959007,
0.03950650617480278,
-0.06758307665586472,
0.021172350272536278,
-0.082... | CBS purchases each electronic product from a manufacturer. The per-item purchase prices from the
manufacturer are shown.
Cash and Credit Purchase Transaction Journal Entries
On April 1, CBS purchases 10 electronic hardware packages at a cost of $620 each. CBS has enough cash-on-
hand to pay immediately with cash. T... | {"file_type": ".pdf", "batch_upload": true, "file_name": "FinancialAccounting-OP.pdf", "uploaded_via": "batch_uploader", "upload_timestamp": "2026-02-07T07:23:08.167529", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "producer": "Prince 11 (www.princexml.com)", "creator": "DocBook XSL St... |
a9b6d3e9-bcad-4b35-bb02-db6b48b96ab6 | [
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0.10143352299928665,
0.037195559591054916,
-0.05346374586224556,
-0.001738367136567831,
-0.07363... | with an invoice date of April 7. The following entry occurs.
Purchases-Desktop Computers increases (debit) for the value of the computers, $12,000 ($400 × 30). Since the
computers were purchased on credit by CBS, Accounts Payable increases (credit) instead of cash.
On April 17, CBS makes full payment on the amount d... | {"moddate": "2020-08-05T15:26:11-05:00", "producer": "Prince 11 (www.princexml.com)", "file_name": "FinancialAccounting-OP.pdf", "uploaded_via": "batch_uploader", "creationdate": "2019-04-24T10:32:54-05:00", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "source": "downloads\\business\\ac... |
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0.057015012949705124,
0.08348125964403152,
0.012352021411061287,
0.014922969043254852,
-0.0475529... | dated May 1. The following entry occurs.
Purchases–Tablet Computers increases (debit) in the amount of $4,020 (67 × $60). Accounts Payable also
increases (credit), but the credit terms are a little different than the earlier example. These credit terms include
a discount opportunity (5/10). This means that CBS has 1... | {"upload_timestamp": "2026-02-07T07:23:08.167529", "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_type": ".pdf", "creationdate": "2019-04-24T10:32:54-05:00", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "total_pages": 1055, "producer": "Prince 11 (www.prin... |
0fd98548-5f86-42c7-9498-250022d59624 | [
-0.06777794659137726,
0.0377451628446579,
0.056871674954891205,
-0.09851803630590439,
-0.06699266284704208,
0.02296384610235691,
0.0590781643986702,
0.07210894674062729,
0.055333785712718964,
0.03813648596405983,
0.043148223310709,
-0.0009285103296861053,
0.0434105210006237,
-0.07884129881... | discount ($4,020 × 5%). Purchase Discounts is considered a contra account and will reduce Purchases at the
end of the period.
Let’s take the same example purchase with the same credit terms, but now assume that CBS paid their
account on May 25. The following entry occurs.
Accounts Payable decreases (debit) and Cash... | {"producer": "Prince 11 (www.princexml.com)", "file_type": ".pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_size_mb": 156.7, "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "source... |
cc4f65cc-0945-4614-94ad-10debcd289cf | [
-0.04148786887526512,
0.01887572929263115,
0.08561111986637115,
-0.08644295483827591,
-0.00990467332303524,
0.027126410976052284,
0.06665657460689545,
0.06634800136089325,
0.0011090909829363227,
0.02205856703221798,
0.04732075333595276,
0.011986039578914642,
0.02669086866080761,
-0.0978094... | following entries occur with the purchase and subsequent return.
Purchases-Phones increases (debit) and Cash decreases (credit) by $18,000 ($60 × 300).
Since CBS already paid in full for their purchase, a full cash refund is issued. This increases Cash (debit) and
This OpenStax book is available for free at http://c... | {"creator": "DocBook XSL Stylesheets V1.79.1", "upload_timestamp": "2026-02-07T07:23:08.167529", "uploaded_via": "batch_uploader", "creationdate": "2019-04-24T10:32:54-05:00", "producer": "Prince 11 (www.princexml.com)", "file_size_mb": 156.7, "batch_upload": true, "title": "Principles of Accounting, Volume 1: Financia... |
a9ac4523-f800-42c1-aec8-95c7bd0d214e | [
-0.06097226217389107,
0.01573014259338379,
0.011896653100848198,
-0.0590425506234169,
-0.027113376185297966,
0.03638770431280136,
0.014078688807785511,
0.06428342312574387,
-0.05321548134088516,
0.023193133994936943,
0.059232018887996674,
-0.022639838978648186,
0.026847299188375473,
-0.065... | (60 × $8). This increases Cash (debit) and increases Purchase Returns and Allowances.
CBS purchases 80 units of the 4-in-1 desktop printers at a cost of $100 each on July 1 on credit. Terms of the
purchase are 5/15, n/40, with an invoice date of July 1. On July 6, CBS discovers 15 of the printers are damaged
and ret... | {"title": "Principles of Accounting, Volume 1: Financial Accounting", "moddate": "2020-08-05T15:26:11-05:00", "creationdate": "2019-04-24T10:32:54-05:00", "uploaded_via": "batch_uploader", "total_pages": 1055, "file_size_mb": 156.7, "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_nam... |
a5f3ed48-f835-4699-815d-3a40121f5c08 | [
-0.019110985100269318,
0.08188305795192719,
-0.00628221221268177,
-0.05061674490571022,
0.020117338746786118,
-0.0019958587363362312,
0.020742125809192657,
0.04481486976146698,
-0.04225444421172142,
0.01668780855834484,
0.08170445263385773,
-0.010253696702420712,
0.018520571291446686,
-0.0... | keep them because the manufacturer issues an allowance of $30 per printer. The following entry recognizes
the allowance.
Accounts Payable decreases (debit) and Purchase Returns and Allowances increases (credit) by $120 (4 × $30).
The purchase was on credit and the allowance occurred before payment. Thus, Accounts Pa... | {"creator": "DocBook XSL Stylesheets V1.79.1", "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_name": "FinancialAccounting-OP.pdf", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "producer": "Prince 11 (www.princexml.com)", "total_pages": 1055, "uploaded_via": "batch... |
a9014453-3083-4421-ad45-1d09c0852dd4 | [
-0.017143459990620613,
0.07179317623376846,
-0.03598016873002052,
-0.0385461188852787,
-0.003768025664612651,
-0.028118712827563286,
-0.0015904013998806477,
0.07309986650943756,
0.013447018340229988,
0.05486869439482689,
0.07751796394586563,
-0.007975190877914429,
0.0527823269367218,
-0.04... | the amount of the discount ($6,380 × 5%).
Summary of Purchase Transaction Journal Entries
The chart in Figure 6.16 represents the journal entry requirements based on various merchandising purchase
transactions using the periodic inventory system.
Figure 6.16
Purchase Transaction Journal Entries Flow Chart. (attrib... | {"source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "uploaded_via": "batch_uploader", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "creationdate": "2019-04-24T10:32:54-05:00", "total_pages": 1055, "file_size_mb": 156.7, "file_name": "FinancialAccounting-OP.... |
fbd0ca8a-6a19-41b8-8757-11ad70a6e4c8 | [
-0.04070798680186272,
0.0280997846275568,
0.03051738440990448,
-0.10567226260900497,
-0.045676905661821365,
0.03587092086672783,
0.05312011390924454,
0.0705154538154602,
0.022324977442622185,
-0.013640896417200565,
0.08483847230672836,
-0.014712641015648842,
0.037779029458761215,
-0.067420... | December 3.
Dec. 6
Returned $150 worth of damaged inventory to the manufacturer and received a full refund.
Dec. 9
Customer paid the account in full, less the return.
Solution
Merchandise Sales
The following example transactions and subsequent journal entries for merchandise sales are recognized
using a periodi... | {"source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "moddate": "2020-08-05T15:26:11-05:00", "upload_timestamp": "2026-02-07T07:23:08.167529", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "file_type": ".pdf", "producer": "Prince 11 (www.princexml.com)", "upl... |
11c3af7b-3f3c-4c3c-9b4a-a54525117b67 | [
-0.04622827097773552,
0.026809656992554665,
0.001974839251488447,
-0.10640447586774826,
-0.05677925422787666,
0.004600608721375465,
0.02374998666346073,
0.07755102962255478,
0.07213101536035538,
0.02581467106938362,
0.04992303252220154,
-0.05494517832994461,
0.06005308777093887,
-0.0875695... | following is the list of products CBS sells to customers; the prices are per-package, and per unit.
414
Chapter 6 Merchandising Transactions
Cash and Credit Sales Transaction Journal Entries
On July 1, CBS sells 10 electronic packages to a customer at a sales price of $1,200 each. The customer pays
immediately wit... | {"file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "creationdate": "2019-04-24T10:32:54-05:00", "file_size_mb": 156.7, "batch_upload": true, "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "moddate": "2020-08-05T15:26:11-05:00", "file_type": ".pdf", "producer... |
4e13bff0-6333-463d-8975-6703a6fe1b95 | [
-0.05302169919013977,
0.04588032886385918,
0.040438711643218994,
-0.09045469760894775,
-0.0002540048735681921,
-0.04504838585853577,
0.006304181180894375,
0.04726215824484825,
0.041137270629405975,
0.06726933270692825,
0.07627265900373459,
-0.03763296827673912,
0.07066410034894943,
-0.0765... | Since the computers were purchased on credit by the customer, Accounts Receivable increases (debit) and
Sales increases (credit) by the selling price of the computers, $15,000 ($750 × 20).
On July 17, the customer makes full payment on the amount due from the July 7 sale. The following entry
occurs.
Accounts Receiv... | {"file_name": "FinancialAccounting-OP.pdf", "file_type": ".pdf", "creationdate": "2019-04-24T10:32:54-05:00", "total_pages": 1055, "creator": "DocBook XSL Stylesheets V1.79.1", "file_size_mb": 156.7, "producer": "Prince 11 (www.princexml.com)", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d... |
798e9e62-ed81-40fe-96b1-24c7f37c6331 | [
-0.09799689799547195,
0.050221651792526245,
0.024464424699544907,
-0.06294114142656326,
-0.0761360228061676,
0.0007851566188037395,
-0.036340974271297455,
0.08047650009393692,
0.05045700818300247,
0.03684986010193825,
0.07544634491205215,
-0.015164671465754509,
0.0229729525744915,
-0.05721... | August 1. The following entries occur.
Accounts Receivable increases (debit) and Sales increases (credit) by $16,800 ($300 × 56). These credit terms
are a little different than the earlier example. These credit terms include a discount opportunity (2/10). This
means that the customer has 10 days from the invoice dat... | {"batch_upload": true, "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "file_type": ".pdf", "creator": "DocBook XSL Stylesheets V1.79.1", "total_pages": 1055, "producer": "Prince 11 (www.princexml.com)", "upload_timestamp": "2026-02-07T07:23:08.167529", "uploaded_via": "batch_uploader",... |
6d84afba-e18e-42c2-af16-625c9364810f | [
-0.09627415984869003,
0.042199332267045975,
0.07356564700603485,
-0.10667458176612854,
-0.05237080901861191,
0.01635882630944252,
0.0329485759139061,
0.05336064472794533,
0.050373468548059464,
0.014682533219456673,
0.06276077032089233,
0.018699491396546364,
0.060578156262636185,
-0.0807754... | owed, before discount. Sales Discounts will reduce Sales at the end of the period to produce net sales.
Let’s take the same example sale with the same credit terms, but now assume that the customer paid their
account on August 25. The following entry occurs.
Cash increases (debit) and Accounts Receivable decreases (... | {"uploaded_via": "batch_uploader", "batch_upload": true, "file_type": ".pdf", "creationdate": "2019-04-24T10:32:54-05:00", "file_name": "FinancialAccounting-OP.pdf", "producer": "Prince 11 (www.princexml.com)", "creator": "DocBook XSL Stylesheets V1.79.1", "title": "Principles of Accounting, Volume 1: Financial Account... |
27b03479-2ea0-4192-914f-96972a339cca | [
-0.07883577793836594,
0.04616103693842888,
0.08190825581550598,
-0.10728085786104202,
-0.03403010964393616,
0.00020879207295365632,
0.0272712092846632,
0.07163777947425842,
0.01368422619998455,
0.038776639848947525,
0.08604162931442261,
-0.00394338509067893,
0.007081209681928158,
-0.113995... | full refund. The following entries occur for the sale and subsequent return.
416
Chapter 6 Merchandising Transactions
Cash increases (debit) and Sales increases (credit) by $37,500 (250 × $150), the sales price of the phones.
Since the customer already paid in full for their purchase, a full cash refund is issued o... | {"creationdate": "2019-04-24T10:32:54-05:00", "uploaded_via": "batch_uploader", "creator": "DocBook XSL Stylesheets V1.79.1", "producer": "Prince 11 (www.princexml.com)", "total_pages": 1055, "file_name": "FinancialAccounting-OP.pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "fil... |
4b0879a6-3be5-4113-8315-aea4aa9d0b32 | [
-0.09249895066022873,
0.04825408384203911,
0.032823968678712845,
-0.08287271857261658,
-0.09607941657304764,
0.03767480328679085,
0.0006474382244050503,
0.06986048072576523,
-0.02985403873026371,
0.016223983839154243,
0.08261842280626297,
-0.021709591150283813,
0.0725722536444664,
-0.08296... | damaged. The customer decides to keep the phones but receives a sales allowance from CBS of $10 per
phone. The following entry occurs for the allowance.
Since the customer already paid in full for their purchase, a cash refund of the allowance is issued in the
amount of $200 (20 × $10). This increases (debit) Sales ... | {"source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "moddate": "2020-08-05T15:26:11-05:00", "file_size_mb": 156.7, "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "creationdate": "2019-04-24T10:32:54-05:00", "source": "downloads\\business\\accounting\\Financia... |
eff27de6-3564-497c-8dcf-9eb87ea9a627 | [
-0.04553402587771416,
0.04820720851421356,
0.015662504360079765,
-0.039457205682992935,
-0.007886667735874653,
0.020552536472678185,
0.01553551945835352,
0.014965122565627098,
-0.021493786945939064,
0.007799990940839052,
0.07593871653079987,
-0.012211247347295284,
0.05778117477893829,
-0.0... | printers. Accounts Receivable is used instead of Cash because the customer purchased on credit.
This OpenStax book is available for free at http://cnx.org/content/col25448/1.4
Chapter 6 Merchandising Transactions
417
The customer has not yet paid for their purchase as of October 6. This increases Sales Returns and ... | {"file_size_mb": 156.7, "creationdate": "2019-04-24T10:32:54-05:00", "total_pages": 1055, "creator": "DocBook XSL Stylesheets V1.79.1", "upload_timestamp": "2026-02-07T07:23:08.167529", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "producer": "Prince 11 (www.princexml.com)", "file_ty... |
45d74f98-a2dd-4c30-98da-2879e58a0942 | [
-0.020740080624818802,
0.06799706071615219,
-0.0038803168572485447,
-0.0713386982679367,
-0.03881143778562546,
-0.025971755385398865,
-0.015195381827652454,
0.07814345508813858,
0.010820993222296238,
0.026347702369093895,
0.045328833162784576,
-0.01887231320142746,
0.008112269453704357,
-0... | On October 15, the customer pays their account in full, less sales returns and allowances. The following
payment entry occurs.
Accounts Receivable decreases (credit) for the original amount owed, less the return of $3,500 and the
allowance of $300 ($19,250 – $3,500 – $300). Since the customer paid on October 15, the... | {"upload_timestamp": "2026-02-07T07:23:08.167529", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "moddate": "2020-08-05T15:26:11-05:00", "batch_upload": true, "uploaded_via": "batch_uploader", "producer": "Prince 11 (www.princexml.com)", "file_hash": "89738e550d63820fbb3a833d14ab04029664... |
463401a3-31c0-4f15-b4fd-55f5b52b8bdd | [
-0.07100576907396317,
0.09675111621618271,
-0.022773392498493195,
-0.041050396859645844,
0.012566832825541496,
-0.007320283446460962,
0.03176405653357506,
0.034057583659887314,
0.0059090182185173035,
0.052551671862602234,
0.10417119413614273,
-0.0039956215769052505,
0.05173259973526001,
-0... | Journal Entry Requirements for Merchandise Sales Transaction Using a Periodic Inventory
System. (attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)
Y O U R T U R N
Recording a Retailer’s Sales Transactions using a Periodic Inventory System
Record the journal entries for the following... | {"file_type": ".pdf", "file_name": "FinancialAccounting-OP.pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "file_size_mb": 156.7, "batch_upload": true, "creationdate": "2019-04-24T10:32:54-05:00", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "uploa... |
82db4ab8-8131-479b-ae70-859d31ebb551 | [
-0.027926787734031677,
0.03149562329053879,
-0.012754361145198345,
-0.03291632607579231,
0.04531681537628174,
0.014830809086561203,
0.10205944627523422,
0.055562615394592285,
0.011630220338702202,
0.037528857588768005,
0.10266157984733582,
-0.044778816401958466,
-0.014256582595407963,
-0.0... | 419
420
Chapter 6 Merchandising Transactions
Key Terms
cash discount
provides a discount on the final price after purchase, if a retailer pays within a discount
window, typically stated in days
cost of goods sold (COGS)
expense account that houses all costs associated with getting a product ready for
sale
FOB... | {"file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "title": "Principles of Accounting, Volume 1: Financial Accounting", "batch_upload": true, "producer": "Prince 11 (www.princexml.com)", "uploaded_via": "batch_uploader", "total_pages": 1055, "creationdate": "2019-04-24T10:32:54-05:00", "s... |
6cb22e90-2798-42bc-8a4b-fc6174419500 | [
0.007078887429088354,
0.0030433388892561197,
-0.01961575448513031,
-0.037667207419872284,
0.008262001909315586,
0.009502580389380455,
0.0013607676373794675,
0.043248873203992844,
0.0362592488527298,
-0.0180471520870924,
0.06863251328468323,
-0.05138975754380226,
0.04589404538273811,
-0.005... | gross margin
amount available after deducting cost of goods sold from net sales, to cover operating
expenses and profit
gross profit margin ratio
proportion of margin a company attains, above their cost of goods sold to cover
operating expenses and profit, calculated by subtracting cost of goods sold from total ne... | {"source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "moddate": "2020-08-05T15:26:11-05:00", "creationdate": "2019-04-24T10:32:54-05:00", "file_type": ".pdf", "file_name": "FinancialAccounting-OP.pdf", "batch_upload": ... |
a79a86f9-6303-4335-8828-a1efcc509ae8 | [
-0.030359912663698196,
0.043898168951272964,
-0.002196568064391613,
-0.03673921525478363,
-0.013540713116526604,
-0.016070157289505005,
0.06509062647819519,
0.024438001215457916,
0.02323777601122856,
-0.0061479066498577595,
0.0992576852440834,
-0.004313654266297817,
0.028359947726130486,
-... | merchandising company
resells finished goods produced by a manufacturer (supplier) to customers
net income
when revenues and gains are greater than expenses and losses
net purchases
outcome of purchase discounts, returns, and allowances deducted from gross purchases
net sales
outcome of sales discounts, returns,... | {"creationdate": "2019-04-24T10:32:54-05:00", "producer": "Prince 11 (www.princexml.com)", "upload_timestamp": "2026-02-07T07:23:08.167529", "creator": "DocBook XSL Stylesheets V1.79.1", "file_type": ".pdf", "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_size_mb": 156.7, "total_pages": 1055,... |
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