ADM 1340 Lecture 5: Merchandising – Periodic and Perpetual Inventory Systems

87 views6 pages

purplewallaby959

7 Feb 2017

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

ceruleanclam927 and 54 others unlocked

ADM 1340 Full Course Notes

Verified Note

42 documents

Document Summary

Gross margin = gross profit / net sales. From each dollar earned from principle business, the amount of profit the company earns. Return of sales = net income / net sales. From each dollar earned from principle business, how much company finally earns. Journal entries for sales returns, sales allowances, and sales discounts. Two types of inventory systems: perpetual inventory systems, periodic inventory systems. Inventory is sold to customers, and is transferred to cost of goods sold. Assets are sold to the customer to earn revenue. Sales returns: customers can return purchased goods according to the return policy. Sales allowance: when customers purchased damaged or defective goods, they may be offered a sales allowance to encourage them to keep the goods. When customers purchase on open account, they may be offered a sales discount to encourage early payment. Sales discounts: early payment discounts offered to customers. Sales returns: customers return merchandise for refund.

Related Questions

Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.

Date

Activities

Units Acquired at Cost

4.Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 95 units from beginning inventory and 225 units from the March 5 purchase; the March 29 sale consisted of 75 units from the March 18 purchase and 115 units from the March 25 purchase. (Round weighted average cost per unit to two decimals and final answers to nearest whole dollar.)

Gross Margin	FIFO	LIFO	Avg. Cost	Spec. ID
Sales
Less: Cost of goods sold
Gross profit

I need help filling the table!!

jadehedgehog412

Selected year-end financial statements of McCordCorporation follow. (All sales were on credit; selected balancesheet amounts at December 31, 2010, were inventory, $50,900; totalassets, $219,400; common stock, $80,000; and retained earnings,$52,348.)

McCORD CORPORATION Income Statement For Year Ended December 31, 2011
Sales	$	451,600
Cost of goods sold		296,950

Gross profit		154,650
Operating expenses		98,700
Interest expense		4,300

Income before taxes		51,650
Income taxes		20,807

Net income	$	30,843

McCORD CORPORATION Balance Sheet December 31, 2011
Assets			Liabilities and Equity
Cash	$	20,000	Accounts payable	$	24,500
Short-term investments		9,400	Accrued wages payable		3,600
Accounts receivable, net		29,400	Income taxes payable		3,400
Notes receivable (trade)*		6,000	Long-term note payable, secured
Merchandise inventory		32,150	by mortgage on plant assets		69,400
Prepaid expenses		2,850	Common stock		80,000
Plant assets, net		149,300	Retained earnings		68,200

Total assets	$	249,100	Total liabilities and equity	$	249,100

*These are short-term notes receivable arising from customer (trade)sales.

Required:

Compute thefollowing. (Use 365 days ayear. Do not round intermediate calculations and round your finalanswers to 1 decimal place. Omit the "%" sign in yourresponse):


(1)	Current ratio	to
(2)	Acid-test ratio	to
(3)	Days' sales uncollected	days
(4)	Inventory turnover	times
(5)	Days' sales in inventory	days
(6)	Debt-to-equity ratio	to
(7)	Times interest earned	times
(8)	Profit margin ratio	%
(9)	Total asset turnover	times
(10)	Return ontotal assets	%
(11)	Return on common stockholders' equity	%

pucemouse541

Selected year-end financial statements of Cabot Corporationfollow. (All sales were on credit; selected balance sheet amountsat December 31, 2015, were inventory, $55,900; total assets,$249,400; common stock, $85,000; and retained earnings,$48,092.)

CABOT CORPORATION Income Statement For Year Ended December 31, 2016
Sales	$	453,600
Cost of goods sold		297,550
Gross profit		156,050
Operating expenses		98,800
Interest expense		3,900
Income before taxes		53,350
Income taxes		21,492
Net income	$	31,858

CABOT CORPORATION Balance Sheet December 31, 2016
Assets			Liabilitiesand Equity
Cash	$	18,000	Accounts payable	$	19,500
Short-term investments		9,400	Accrued wages payable		3,800
Accounts receivable, net		33,600	Income taxes payable		3,300
Notes receivable (trade)*		6,000	Long-term note payable,secured
Merchandise inventory		36,150	by mortgage on plant assets		66,400
Prepaid expenses		2,500	Common stock		85,000
Plant assets, net		152,300	Retained earnings		79,950
Total assets	$	257,950	Total liabilities andequity	$	257,950

* These are short-term notes receivable arising from customer(trade) sales.

Required:

Compute the following: (1) current ratio, (2) acid-test ratio,(3) days' sales uncollected, (4) inventory turnover, (5) days'sales in inventory, (6) debt-to-equity ratio, (7) times interestearned, (8) profit margin ratio, (9) total asset turnover, (10)return on total assets, and (11) return on common stockholders'equity. (Do not round intermediatecalculations.)

* These are short-term notes receivable arising from customer(trade) sales.

Acid-Test Ratio
	Choose Numerator:	/	Choose Denominator:	=	Acid-Test Ratio
		/		=	Acid-Test Ratio
2013:		/		=		to 1

Times Interest Earned
	Choose Numerator:		/	Choose Denominator:	=	Times Interest Earned
		+	/		=	Times Interest Earned
2013:		+	/		=		times

Total Asset Turnover
	Choose Numerator:	/	Choose Denominator:	=	Total Asset Turnover
		/		=
2013:		/		=		times

Return on Common Stockholders' Equity
	Choose Numerator:			/	Choose Denominator	=	Return On Common Stockholders' Equity
		-	Net income	/	Average common stockholders' equity	=	Return On Common Stockholders' Equity
2013:		-		/		=

copperyellowjacket486

ADM 1340 Lecture 5: Merchandising – Periodic and Perpetual Inventory Systems

ADM 1340 Full Course Notes

Document Summary

Get access

Related Documents

ADM 1340 Lecture 5: Chapter 5

ADM 1340 Chapter Notes - Chapter 5: Gross Margin, Perpetual Inventory, Gross Profit

ADM 1340 Lecture Notes - Lecture 5: Perpetual Inventory, Income Statement, Purchase Order

Related Questions