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Controlling and Reporting Merchandise Sales

Controlling and Reporting Merchandise Sales. Inventory Quantities. Inventory Costs. Financial Statements. Unsold Inventory. Balance Sheet. Sold Inventory. Income Statement. 6- 1. Inventory Control. Perpetual Inventory System. Periodic Inventory System. Continuous Tracking.

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Controlling and Reporting Merchandise Sales

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  1. Controlling and Reporting Merchandise Sales Inventory Quantities Inventory Costs Financial Statements Unsold Inventory Balance Sheet Sold Inventory Income Statement 6-1

  2. Inventory Control Perpetual Inventory System Periodic Inventory System Continuous Tracking No Up-to-Date Records Can Estimate Shrinkage Can’t Estimate Shrinkage 6-2

  3. Sales Transactions Merchandisers earn revenues by transferring ownership of merchandise to a customer, either for cash or on credit. For a merchandiser who is shipping goods to a customer, the transfer of ownership occurs at one of two possible times: FOB shipping point —the sale is recorded when the goods leave the seller’s shipping department. FOB destination —the sale is recorded when the goods reach their destination (the customer). 6-3

  4. Sales Returns and Allowances When goods sold to a customer arrive in damaged condition or are otherwise unsatisfactory, the customer can (1) return them for a full refund or (2) keep them and ask for a reduction in the selling price, called an allowance. 6-4

  5. Sales on Account and Sales Discounts A sales discount is a sales price reduction given to customers for prompt payment of their account balance. 6-5

  6. GrossProfit % Gross ProfitNet Sales = × 100 Gross Profit Percentage 6-6

  7. End of Chapter 6

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