Chapter 13: Chapter 13: Merchandise InventoryMerchandise Inventory

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Merchandise InventoryMerchandise InventoryMerchandise inventory includes all goods owned Merchandise inventory includes all goods owned by the business and held for sale. The account by the business and held for sale. The account used for Jessica's Sales & Service’s used for Jessica's Sales & Service’s merchandise inventory is Account No. 12000, merchandise inventory is Account No. 12000, Merchandise Inventory.Merchandise Inventory.Peachtree uses a perpetual inventory system.Peachtree uses a perpetual inventory system.Inventory calculations include FIFO (first in, first Inventory calculations include FIFO (first in, first out), LIFO (last in, first out), and average cost out), LIFO (last in, first out), and average cost methods.methods.Peachtree tracks the inventory items you buy Peachtree tracks the inventory items you buy and sell. After you post, Peachtree automatically and sell. After you post, Peachtree automatically updates the cost and quantity of each inventory updates the cost and quantity of each inventory item.item.

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Software Objectives, p. 479Software Objectives, p. 479

1.1. Enter inventory maintenance and default Enter inventory maintenance and default information.information.

2.2. Enter inventory item information, including Enter inventory item information, including Sales account, Merchandise Inventory Sales account, Merchandise Inventory account, and Cost of Sales account.account, and Cost of Sales account.

3.3. Enter item codes when recording purchases Enter item codes when recording purchases and sales.and sales.

4.4. Enter inventory adjustments..Enter inventory adjustments..

5.5. Make three backups: 2 for Jessica's Sales & Make three backups: 2 for Jessica's Sales & Service; 1 for the end-of-chapter exercise.Service; 1 for the end-of-chapter exercise.

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Web Objectives, p. 479Web Objectives, p. 4791.1. Use your Internet browser to go to the book’s Use your Internet browser to go to the book’s

website at website at www.mhhe.com/yacht2003www.mhhe.com/yacht2003

2.2. Go to the Internet Activity link on the book’s Go to the Internet Activity link on the book’s website. Then, select WEB EXERCISES website. Then, select WEB EXERCISES PART 3. Complete the fourth web exercise in PART 3. Complete the fourth web exercise in Part 3, “Accountant’s World.”Part 3, “Accountant’s World.”

3.3. Use a word processing program to write Use a word processing program to write summaries of the websites that you visited.summaries of the websites that you visited.

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The journal entry for purchasing four pairs of The journal entry for purchasing four pairs of curtains from Rene Burton Fabrics at $30 curtains from Rene Burton Fabrics at $30 each, p. 481each, p. 481

Account IDAccount ID Account DescriptionAccount Description DebitDebit CreditCredit

1200012000 Merchandise InventoryMerchandise Inventory 120.00120.00

20000/20000/

RBF08RBF08

Accounts Payable/Accounts Payable/

Rene Burton FabricsRene Burton Fabrics 120.00120.00

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The journal entry for selling three pairs of The journal entry for selling three pairs of curtains to Phil Merchon at $100 each, p. 481curtains to Phil Merchon at $100 each, p. 481

Account IDAccount ID Account DescriptionAccount Description DebitDebit CreditCredit

5050050500 Cost of Goods Sold-Cost of Goods Sold-WallWall

90.0090.00

11000/pm00511000/pm005 Accounts Receivable/Accounts Receivable/

Phil MerchonPhil Merchon 324.00324.00

1200012000 Merchandise InventoryMerchandise Inventory 90.0090.00

4040040400 Sales-WallSales-Wall 300.00300.00

2310023100 Sales Tax PayableSales Tax Payable 24.0024.00

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Peachtree TipsPeachtree Tips

Chapters 11 and 12 Chapters 11 and 12 mustmust be be completed before starting Chapter 13. completed before starting Chapter 13.

In Chapters 11-14, Peachtree uses the In Chapters 11-14, Peachtree uses the average inventory method.average inventory method.

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Backing Up Chapter 13Backing Up Chapter 13

Disk Disk Backup Name Backup Name

KBKB Page Page Nos.Nos.

17 of 1817 of 18 A:\Chapter 13 BeginA:\Chapter 13 Begin 117 KB117 KB 489489

A:\Chapter 13A:\Chapter 13 127 KB127 KB 504504

A:\Exercise 13-1A:\Exercise 13-1 107 KB107 KB 508508

TOTAL KBTOTAL KB 351 KB351 KB.

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Chapter 13 TopicsChapter 13 Topics1.1. Software & web objectives, p. 479Software & web objectives, p. 479

2.2. Cost methods, p. 480Cost methods, p. 480

a. Average cost, pp. 480-481a. Average cost, pp. 480-481

b. LIFO (Last in, First Out), pp. 481-482b. LIFO (Last in, First Out), pp. 481-482

c. FIFO (First in, First Out), p. 482c. FIFO (First in, First Out), p. 482

3.3. Types of Inventory Items, pp. 482-483Types of Inventory Items, pp. 482-483

4.4. Getting Started, pp. 483-485Getting Started, pp. 483-485

5.5. Entering inventory item maintenance Entering inventory item maintenance information, pp. 485-487information, pp. 485-487

6.6. Inventory adjustments, pp. 487-489Inventory adjustments, pp. 487-489

7.7. Backing up your data, p. 489Backing up your data, p. 489

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Chapter 13 Topics, concludedChapter 13 Topics, concluded8.8. Additional Transactions, pp. 490-496Additional Transactions, pp. 490-4969.9. Printing Reports, pp. 496-503Printing Reports, pp. 496-50310.10. Backing up Chapter 13 data, p. 504Backing up Chapter 13 data, p. 50411.11. Internet activity, p. 505Internet activity, p. 50512.12. Summary and review, pp. 505-506Summary and review, pp. 505-506

a. Going to the net, p. 506a. Going to the net, p. 506b. Short-answer questions, pp. 506-508b. Short-answer questions, pp. 506-508b. Exercise 13-1, p. 508b. Exercise 13-1, p. 508c. Exercise 13-2, p. 509c. Exercise 13-2, p. 509

d. Chapter 13 index, p. 510d. Chapter 13 index, p. 510

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Getting started, pp. 483-484Getting started, pp. 483-484Complete steps 1 – 2i on pages 483 and 484. Complete steps 1 – 2i on pages 483 and 484. Click on Maintain, Default Information, then Inventory Items.Click on Maintain, Default Information, then Inventory Items.

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““Taxes/Shipping” tab, p. 484Taxes/Shipping” tab, p. 484Click on the “Taxes/Shipping” tab.Click on the “Taxes/Shipping” tab.

Read the information on p. 485. Then, click on <OK> to Read the information on p. 485. Then, click on <OK> to close the window and return to the menu bar.close the window and return to the menu bar.

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Entering inventory item maintenance Entering inventory item maintenance information, pp. 485-487information, pp. 485-487

Read the information on page 485. Then, Read the information on page 485. Then, complete steps 1 – 4 on pp. 485-487.complete steps 1 – 4 on pp. 485-487.

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Inventory Adjustments, p. 487Inventory Adjustments, p. 487Read the information on p. 587. Then, click on Tasks, Purchases/Receive Inventory. Read the information on p. 587. Then, click on Tasks, Purchases/Receive Inventory. Record the January 14, 2003, transaction.Record the January 14, 2003, transaction.

Post and close the “Purchases/Receive Inventory” window. Post and close the “Purchases/Receive Inventory” window.

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Inventory Adjustments, pp. 488-489Inventory Adjustments, pp. 488-489

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Backing up your data, p. 489Backing up your data, p. 489

Complete steps 1 – 9 on page 489 to back Complete steps 1 – 9 on page 489 to back up your data.up your data.

Use Use Chapter 13 BeginChapter 13 Begin as the back up as the back up name.name.

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Additional Transactions, pp. 490-496Additional Transactions, pp. 490-496

Complete the transactions on pages 490– Complete the transactions on pages 490– 496.496.

Compare your printouts with the ones Compare your printouts with the ones shown on pages 490-495.shown on pages 490-495.

Complete the January 31, 2003 Complete the January 31, 2003 transaction on p. 496.transaction on p. 496.

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Printing reports, pp. 496-503Printing reports, pp. 496-503

Complete steps 1–8 on pages 496–503.Complete steps 1–8 on pages 496–503.

Compare your reports with the ones Compare your reports with the ones shown on pages 496-503.shown on pages 496-503.

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Backing Up Chapter 13 Data, p. 504Backing Up Chapter 13 Data, p. 504

Complete steps 1 - 9 on page 504.Complete steps 1 - 9 on page 504.The back up name is The back up name is Chapter 13Chapter 13..

Click on <Click on <OOk>. Compare your check to the one shown on p. 381. Record the additional payments k>. Compare your check to the one shown on p. 381. Record the additional payments shown on p. 382. shown on p. 382.

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Glossary of TermsGlossary of TermsChapter 13Chapter 13

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Merchandise inventory, p. 479Merchandise inventory, p. 479

Merchandise inventory includes all goods Merchandise inventory includes all goods owned by the business and held for sale.owned by the business and held for sale.

The account used for Jessica's Sales & The account used for Jessica's Sales & Service’s merchandise inventory is Service’s merchandise inventory is Account No. 12000, Merchandise Account No. 12000, Merchandise Inventory.Inventory.

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Merchandising business, p. 479Merchandising business, p. 479

Retail stores that resell goods and/or Retail stores that resell goods and/or perform services.perform services.

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FIFO, p. 479FIFO, p. 479

The FIFO (first in, first out) inventory The FIFO (first in, first out) inventory method assumes that the items in the method assumes that the items in the beginning inventory are sold first.beginning inventory are sold first.

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LIFO, p. 479LIFO, p. 479

The LIFO (last in, first out) inventory The LIFO (last in, first out) inventory method assumes that the goods received method assumes that the goods received last are sold first.last are sold first.

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Internet Activity, p. 505Internet Activity, p. 50511 Go to the book’s website at Go to the book’s website at www.mhhe.com/yacht2003www.mhhe.com/yacht2003

22 In the “Student Center” list, link to Internet Activities.In the “Student Center” list, link to Internet Activities.

33 Link to WEB EXERCISES PART 3.Link to WEB EXERCISES PART 3.

44 Complete the “ACCOUNTANT’S WORLD” exercise. Read Complete the “ACCOUNTANT’S WORLD” exercise. Read steps 1 and 2.steps 1 and 2.

55 Follow the steps shown on the book’s website to complete Follow the steps shown on the book’s website to complete this Internet activity.this Internet activity.

66 Using a word processing program, write a brief summary Using a word processing program, write a brief summary of what you find. Include all appropriate website of what you find. Include all appropriate website addresses.addresses.

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Going to the Net, p. 506Going to the Net, p. 506Access the Small Business Access the Small Business Knowledge Base website at Knowledge Base website at www.bizmove.com/finance/m3d3.htmwww.bizmove.com/finance/m3d3.htmScroll down the screen to Scroll down the screen to “Merchandise Inventories: Perpetual “Merchandise Inventories: Perpetual Inventory.”Inventory.”

1.1. What is a perpetual inventory at retail?What is a perpetual inventory at retail?2.2. When is a physical count of inventory When is a physical count of inventory

necessary?necessary?