英文版财务会计课件第五章.ppt

Chapter 9,Inventories,Accounting, 21st Edition Warren Reeve Fess,PowerPoint Presentation by Douglas Cloud Professor Emeritus of Accounting Pepperdine University,Some of the action has been automated, so click the mouse when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.,1. Summarize and provide examples of internal control procedures that apply to inventories. 2. Describe the effect of inventory errors on the financial statement. 3. Describe the three inventory cost flow assumptions and how they impact the income statement and balance sheet. 4. Compute the cost of inventory under the perpetual inventory system, using the following cost methods: first-in, first-out; last-in, first-out; average cost.,Objectives,After studying this chapter, you should be able to:,5. Compute the cost of inventory under the periodic inventory system, using the following costing methods: first-in, first-out; last-in, first-out; average cost. 6. Compare and contrast the use of the three inventory costing methods. 7. Compute the proper valuation of inventory at other than cost, using the lower-of-cost-or-market and net realization value concepts. 8. Prepare a balance sheet presentation of merchandise inventory.,Objectives,9. Estimate the cost of inventory, using the retail method and the gross profit method. 10. Compute the interpret the inventory turnover ratio and number of days sales in inventory.,Objectives,Why is Inventory Control Important?,Inventory is a significant asset and for many companies the largest asset. Inventory is central to the main activity of merchandising and manufacturing companies. Mistakes in determining inventory cost can cause critical errors in financial statements. Inventory must be protected from external risks ( such as fire and theft) and internal fraud by employees.,AGREE,AGREE,AGREE,JOURNAL,Description,Nov. 9,Post. Ref.,Date,Inventory 1 222 00,Accounts Payable-XYZ Co. 1 222 00,Purchased merchandise on account.,LIABILITIES,OWNERS EQUITY,REVENUES,ASSETS,COSTS & EXPENSES,Effect of Inventory Errors on Financial Statements,Merchandise Inventory,Cost of Merchandise Sold,If merchandise inventory is . . . . . . . Cost of merchandise sold is . . . . . . Gross profit and net income are . . . Ending owners equity is . . . . . . . . .,overstated understated overstated overstated,Net Income,If merchandise inventory is . . . . . . . Cost of merchandise sold is . . . . . . Gross profit and net income are . . . Ending owners equity is . . . . . . . . .,understated overstated understated understated,Effect of Inventory Errors on Financial Statements,FIFO,Purchased goods,Sold goods,Inventory Cost Flow Assumptions,Purchased goods,Sold goods,Inventory Cost Flow Assumptions,LIFO,Average Cost,Purchased goods,Sold goods,Inventory Cost Flow Assumptions,Inventory Costing Methods,40% 30% 20% 10% 0%,43%,34%,19%,4%,Perpetual Inventory Costs,Inventory cost data to demonstrate FIFO and LIFO Perpetual Systems,Cost of Mdse. Sold,Item 127B Units Cost Price Jan. 1 Inventory 10 $20 4 Sale 7 $30 10 Purchase 8 21 22 Sale 4 31 28 Sale 2 32 30 Purchase 10 22,Fifo Perpetual,Item 127B,FIFO Perpetual Inventory Account,Purchases Cost of Mdse. Sold Inventory Balance,Unit Total Unit Total Unit Total Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost,Jan. 1 10 20 200,The firm begins the year with 10 units of Item 127B on hand at a total cost of $200.,Inventory cost data to demonstrate FIFO and LIFO Perpetual Systems,Cost of Mdse. Sold,Item 127B Units Cost Price Jan. 1 Inventory 10 $20 4 Sale 7 $30 10 Purchase 8 21 22 Sale 4 31 28 Sale 2 32 30 Purchase 10 22,FIFO Perpetual Inventory Account,On January 4, 7 units of Item 127B are sold at $30 each.,Item 127B,FIFO Perpetual Inventory Account,Purchases Cost of Mdse. Sold Inventory Balance,Unit Total Unit Total Unit Total Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost,Jan. 1 10 20 200 4 7 20 140 3 20 60,Jan. 1 10 20 200,On January 4, 7 units of Item 127B are sold at $30 each.,Inventory cost data to demonstrate FIFO and LIFO Perpetual Systems,Cost of Mdse. Sold,Item 127B Units Cost Price Jan. 1 Inventory 10 $20 4 Sale 7 $30 10 Purchase 8 21 22 Sale 4 31 28 Sale 2 32 30 Purchase 10 22,FIFO Perpetual Inventory Account,On January 10, the firm purchased eight units at $21 each.,Item 127B,FIFO Perpetual Inventory Account,Purchases Cost of Mdse. Sold Inventory Balance,Unit Total Unit Total Unit Total Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost,Jan. 1 10 20 200 4 7 20 140 3 20 60,10 8 21 168 3 20 60 8 21 168,On January 10, the firm purchased eight units at $21 each.,FIFO Perpetual Inventory Account,On January 22, the firm sold four units for $31 each.,Item 127B,Purchases Cost of Mdse. Sold Inventory Balance,Unit Total Unit Total Unit Total Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost,Jan. 1 10 20 200 4 7 20 140 3 20 60,10 8 21 168 3 20 60 8 21 168,FIFO Perpetual Inventory Account,22 3 20 60 1 21 21 7 21 147,On January 22, the firm sold four units for $31 each.,FIFO Perpetual Inventory Account,On January 28, the firm sold two units at $32.,Item 127B,Purchases Cost of Mdse. Sold Inventory Balance,Unit Total Unit Total Unit Total Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost,Jan. 1 10 20 200 4 7 20 140 3 20 60,10 8 21 168 3 20 60 8 21 168,FIFO Perpetual Inventory Account,22 3 20 60 1 21 21 7 21 147,28 2 21 42 5 21 105,On January 28, the firm sold two units at $32.,FIFO Perpetual Inventory Account,On January 30, purchased ten additional units of Item 127B at $22 each.,Item 127B,Purchases Cost of Mdse. Sold Inventory Balance,Unit Total Unit Total Unit Total Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost,Jan. 1 10 20 200 4 7 20 140 3 20 60,10 8 21 168 3 20 60 8 21 168,FIFO Perpetual Inventory Account,22 3 20 60 1 21 21 7 21 147,28 2 21 42 5 21 105,30 10 22 220 5 21 105 10 22 220,Totals 18 $388 13 $263 15 $325,On January 30, purchased ten additional units of Item 127B at $22 each.,Lifo Perpetual,Item 127B,LIFO Perpetual Inventory Account,Purchases Cost of Mdse. Sold Inventory Balance,Unit Total Unit Total Unit Total Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost,Jan. 1 10 20 200,The firm begins the year with 10 units of Item 127B on hand at a total cost of $200.,Item 127B,LIFO Perpetual Inventory Account,Purchases Cost of Mdse. Sold Inventory Balance,Unit Total Unit Total Unit Total Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost,Jan. 1 10 20 200,4 7 20 140 3 20 60,On January 4, the firm sold 7 units at $30 each.,Item 127B,LIFO Perpetual Inventory Account,Purchases Cost of Mdse. Sold Inventory Balance,Unit Total Unit Total Unit Total Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost,Jan. 1 10 20 200,4 7 20 140 3 20 60,10 8 21 168 3 20 60 8 21 168,On January 10, the firm purchased eight units at $21 each.,Note that a new layer is formed.,Item 127B,LIFO Perpetual Inventory Account,Purchases Cost of Mdse. Sold Inventory Balance,Unit Total Unit Total Unit Total Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost,Jan. 1 10 20 200,4 7 20 140 3 20 60,10 8 21 168 3 20 60 8 21 168,On January 22, the firm sells four units at $31 each.,22 4 21 84 3 20 60 4 21 84,Of the 4 units sold, all come from the most recent purchase at a cost of $21 each.,Item 127B,LIFO Perpetual Inventory Account,Purchases Cost of Mdse. Sold Inventory Balance,Unit Total Unit Total Unit Total Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost,Jan. 1 10 20 200,4 7 20 140 3 20 60,10 8 21 168 3 20 60 8 21 168,On January 28, sold two units at $32 each.,22 4 21 84 3 20 60 4 21 84,28 2 21 42 3 20 60 2 21 42,Item 127B,LIFO Perpetual Inventory Account,Purchases Cost of Mdse. Sold Inventory Balance,Unit Total Unit Total Unit Total Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost,Jan. 1 10 20 200,4 7 20 140 3 20 60,10 8 21 168 3 20 60 8 21 168,On January 30, purchase 10 units at $22 each.,22 4 21 84 3 20 60 4 21 84,28 2 21 42 3 20 60 2 21 42,30 10 22 220 3 20 60 2 21 42 10 22 220,Item 127B,LIFO Perpetual Inventory Account,Purchases Cost of Mdse. Sold Inventory Balance,Unit Total Unit Total Unit Total Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost,Jan. 1 10 20 200,4 7 20 140 3 20 60,10 8 21 168 3 20 60 8 21 168,22 4 21 84 3 20 60 4 21 84,28 2 21 42 3 20 60 2 21 42,30 10 22 220 3 20 60 2 21 42 10 22 220,Totals 18 $388 13 $266 15 $322,Fifo Periodic,Jan. 1 Beginning Inventory,200 units $9,Mar. 10 Purchase,300 units $10,400 units $11,Sept. 21 Purchase,100 units $12,Nov. 18 Purchase,Fifo Periodic,Fifo Periodic,200 units $9,300 units $10,400 units $11,100 units $12,$10,400,Fifo Periodic,A physical count on December 31 reveals that 700 of the 1,000 units have been sold.,Using fifo, the first units purchased are theoretically the first units sold. We begin the count with January 1.,Fifo Periodic,200 units $9,300 units $10,400 units $11,100 units $12,$10,400,= $1,800 Jan. 1,= 3,000 Mar. 10,= 4,400 Sept. 21,= 1,200 Nov. 18,Sold these 200,Sold these 300,Sold 200 of these,200 units $11,= $ 0 Jan. 1,= 0 Mar. 10,= 2,200 Sept. 21,$ 3,400,Ending inventory,Cost of merchandise available for sale $10,400 Less ending inventory 3,400 Cost of merchandise sold $ 7,000,Fifo Periodic,Jan. 1 200 units at $9,Summary of Fifo Periodic,Mar. 10 300 units at $10,Sep. 21 400 units at $11,Nov. 18 100 units at $12,$1,800,$3,000,$4,400,$1,200,Purchases,Merchandise Available for Sale,$1,800,$3,000,$2,200,Cost of Merchandise Sold,200 units at $9,$10,400,$2,200,$1,200,$7,000,Merchandise Inventory,$3,400,300 units at $10,200 units at $11,200 units at $11,100 units at $12,1,000 units,700 units,300 units,Lifo Periodic,Jan. 1 Beginning Inventory,200 units $9,Mar. 10 Purchase,300 units $10,400 units $11,Sept. 21 Purchase,100 units $12,Nov. 18 Purchase,Lifo Periodic,Using lifo, the most recent batch purchased is considered the first batch of merchandise sold.,Jan. 1 Beginning Inventory,200 units $9,Mar. 10 Purchase,300 units $10,400 units $11,Sept. 21 Purchase,100 units $12,Nov. 18 Purchase,Lifo Periodic,Assume again that 700 units were sold during the year.,200 units $9,300 units $10,400 units $11,100 units $12,Lifo Periodic,Sold these 100,Sold these 400,Sold 200 of these,100 units $10,$10,400,0,0,1,000,Cost of merchandise available for sale $10,400 Less ending inventory 2,800 Cost of merchandise sold $ 7,600,Lifo Periodic,Jan. 1 200 units at $9,Summary of Lifo Periodic,Mar. 10 300 units at $10,Sep. 21 400 units at $11,Nov. 18 100 units at $12,$1,800,$3,000,$4,400,$1,200,$1,800,$1,000,Cost of Merchandise Sold,200 units at $9,$10,400,$4,400,$1,200,$2,800,$7,600,100 units at $10,200 units at $10,400 units at $11,100 units at $12,$2,000,700 units,1,000 units,300 units,Purchases,Merchandise Available for Sale,$1,800,Cost of Merchandise Sold,Jan. 1 Beginning Inventory,200 units $9,Mar. 10 Purchase,300 units $10,400 units $11,Sept. 21 Purchase,100 units $12,Nov. 18 Purchase,The average cost periodic method is based on the average cost of identical units.,Average Cost Periodic,Average Cost Periodic,200 units $9 = $ 1,800,300 units $10 = $ 3,000,400 units $11 = $ 4,400,100 units $11 = $ 1,200,$10,400 Cost of merchandise available for sale,Cost of Merchandise Available for Sale,Units Available for Sale During Year,= Average Unit Cost,= $10.40 per Unit,Average Cost Periodic,Cost of merchandise available for sale $10,400 Less ending inventory ($10.40 x 300) 3,120 Cost of merchandise sold $ 7,280,To verify this amount, multiply 700 units sold times $10.40 to get the same $7,280.,Average Cost Periodic,$ 3,800 2,700 4,650 3,920 Total $15,520 $15,472 $15,070,Valuation of Inventory at Lower-of-Cost-or-Market,A 400 $10.25 $ 9.50 $ 4,100 $ 3,800 B 120 22.50 24.10 2,700 2,892 C 600 8.00 7.75 4,800 4,650 D 280 14.00 14.75 3,920 4,130,Unit Unit Inventory Cost Market Total Total Lower Item Quantity Price Price Cost Market C or M,The market decline based on individual items ($15,520 $15,070) = $450,Assets Current assets: Cash $ 19 400 00 Accounts receivable $80 000 00 Less allowance for doubtful accounts 3 000 00 77 000 00 Merchandise inventory at lower of cost (first-in, first-out method) or market 216 300 00,Metro-Arts Balance Sheet December 31, 2007,Presentation of Merchandise Inventory on the Balance Sheet,Estimating Inventory Cost,Retail Method of Estimating Inventory Cost,Retail method is based on relationship between cost of merchandise available for sale and the retail price. Retail prices of all merchandise must be accumulated and totaled. Inventory at retail is calculated at retail price of merchandise available for sale less net sales at retail. Ratio is calculated as cost divided by retail price. Inventory at retail price times cost ratio equals estimated cost of inventory.,Retail Inventory Method,Step 1: Determine the ratio of cost to the retail price.,Cost Retail Merchandise inventory, Jan. 1 $19,400 $ 36,000 Purchases in January (net) 42,600 64,000,Merchandise available for sale $62,000 $100,000,Ratio of cost to retail price =,= 62%,Retail Inventory Method,Step 2: Determine the ending inventory at retail.,Sales for January (net) 70,000 Merchandise inventory, January 31, at retail $ 30,000,Cost Retail Merchandise inventory, Jan. 1 $19,400 $ 36,000 Purchases in January (net) 42,600 64,000,Merchandise available for sale $62,000 $100,000,Retail Inventory Method,Step 3: Calculate the estimated inventory at cost.,Gross Profit Method of Estimating Inventory Cost,1. A gross profit percentage rate is estimated based on previous experience adjusted for known changes