1 chapter 8 adjustments for merchandizing business: 商业企业会计调整
TRANSCRIPT
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Chapter 8
Adjustments for
Merchandizing Business:
商业企业会计调整
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The Accounting CycleThe Accounting Cycle
Journalize transactions.
Post entries to the ledger accounts.
Prepare trial balance.
Make end-of-year
adjustments.
Prepare adjusted trial balance.
Prepare financial
statements.
Prepare after closing trial balance.
Journalize and post closing
entries.
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An adjusting entry is recorded to bring an asset or liability account balance to its proper amount.
Adjusting Accounts
Prepaidinsurance
Prepaidinsurance
adjustmentadjustment
Unearnedrevenue
Unearnedrevenue
DepreciationDepreciationSuppliesSupplies
MerchandizeInventory
MerchandizeInventory
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Periodic inventory method 定期盘存制
Expense Account Merchandize inventory
Adjusting(ending inventory)
adjusting
Adjusting(ending inventory)
Purchase amount in This period
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Adjustment for merchandize inventory
A merchandizing business must make adjustment for inventory account when using periodic method to record the inventory.
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Computing Cost of Goods Sold in Periodic Inventory System
The accounting records of Party Supply show the following:
Inventory, Jan. 1, 2003 $ 14,000
Purchases (during 2003) 130,000
The accounting records of Party Supply show the following:
Inventory, Jan. 1, 2003 $ 14,000
Purchases (during 2003) 130,000
At December 31, 2003, Party Supply counted the merchandise
on hand at $12,000.
At December 31, 2003, Party Supply counted the merchandise
on hand at $12,000.
Calculate Party Supply’s cost of goods sold for 2003.
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Computing Cost of Goods Sold in Periodic Inventory System
Inventory (beginning of the year) 14,000$ Add: Purchases 130,000 Cost of goods available for sale 144,000 Less: Inventory (end of year) 12,000 Cost of goods sold 132,000$
Cost of Goods Sold can be calculated as follows:
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Periodic inventory method 定期盘存制
Cost of Good Sold
12/3112000
12/ 3114000
Merchandise inventory
12/ 3114000
1/114000
12/ 3112000
adjusting
closing
Purchases
1/1----12/ 31130000
12/ 31130000
adjusting
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Periodic inventory method 定期盘存制
Income Summary
12/3112000
12/ 3114000
Merchandise inventory
12/ 3114000
1/114000
12/ 3112000
adjusting
closing
Purchases
1/1----12/ 31130000
12/ 31130000
adjusting
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Periodic inventory method 定期盘存制
Income SummaryMerchandise inventory
Adjusting (beginning inventory)
Beginningbalance
Adjusting(ending inventory) adjusting
adjusting
Adjusting(ending inventory)
Purchases
Adjusting (beginning inventory)
Purchase amount in This period
purchase(Inventory bought in
this period)
closing
Step 1
Step 2
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Creating Cost of Goods Sold in Periodic Inventory System
adjust beginning balance of inventory to income summary
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Creating Cost of Goods Sold in Periodic Inventory System
Now, Party Supply must record the ending inventory
amount.
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An item is “material” if knowledge of the item might reasonably influence the
decisions of users of financial statements.
An item is “material” if knowledge of the item might reasonably influence the
decisions of users of financial statements.
Supplies
Lightbulbs
The Materiality Principle (重要性原则)
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GENERAL JOURNAL Page 34Date Description PR Debit Credit
GENERAL JOURNAL Page 34Date Description PR Debit Credit
Dec. 1 Office Supplies 1,500
cash 1,500
Adjusting Supplies
On December 1, 2001, Scott Company paid $1,500 yuan worth of supplies for cash,
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GENERAL JOURNAL Page 34Date Description PR Debit Credit
GENERAL JOURNAL Page 34Date Description PR Debit Credit
Dec. 31 Office Supplies Expense 1,000
Office Supplies 1,000
Adjusting
Adjusting Supplies
On December 31, 2001, Scott Company take a physical count of the supplies and found that
there were 500 yuan worth of supplies left. The adjusting journal entry ($1000) needed on
December 31, 2001 is shown below.
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Adjusting Supplies
After posting, the accounts involved look like this:
Office supplies Office Supplies expense
12/1 $15,00 12/31 $1,00012/31 $1,000
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Prior Periods Current Period Future Periods
TransactionCollected
from customers in
advance (creates a liability).
TransactionCollected
from customers in
advance (creates a liability).
End of Current Period
Adjusting Entry Recognize portion earned as revenue, and Reduce balance of liability account.
Adjusting Entry Recognize portion earned as revenue, and Reduce balance of liability account.
Converting Liabilities to Revenue-- Adjustment for Unearned Revenue
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Adjusting Unearned Revenue (liability)
Cash received in advance for providing
products or services.
Cash received in advance for providing
products or services.
Unearned revenue (liability) Revenue
UnadjustedBalance
CreditAdjustment
DebitAdjustment
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The Accounting CycleThe Accounting Cycle
Journalize transactions.
Post entries to the ledger accounts.
Prepare trial balance.
Make end-of-year
adjustments.
Prepare adjusted trial balance.
Prepare financial
statements.
Prepare after closing trial balance.
Journalize and post closing
entries.
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Assignment
• Problem 3 on page 207
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End of Chapter 8 End of Chapter 8
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