Professional Documents
Culture Documents
Merchandising Operations
Merchandising Operations
Merchandising Operations
OPERATIONS
Gross Sales
COMPARISON OF INCOME - Sales Discounts
SERVICE
SERVICE MERCHANDISING
MERCHANDISING
Revenues Gross SalesNet Sales P xx
Service Revenuesfrom PServices
xx
Sales Discounts
Minus (xx)
Other Income/GainsAdd xx Sales Returns (xx)
Cost of Sales
Net Sales P xx
Other
Total Income and/or
Revenues P xx Gains Cost of GoodsEquals
Sold (xx)
Expenses and Losses
Minus (xx) Gross Profit
Gross Profit P xx
OperatingAdd
Expenses
or minus(xx)
Profit Expenses
or (Loss) P xxLosses
and Operating Profit
Other Income orPExpenses
xx
Other Income xx
Equals Equals (xx)
Other Expenses
Profit or (Loss) Profit orProfit
(Loss) orP(Loss)
xx
Other Income and Expenses – those
that are incidental or not related to the
MERCHANDISING major operation of the business
Gross Sales P xx Gross Sales – Total Amount of Sales that
Sales Discounts (xx) arise from sale of goods.
Sales Returns (xx) Sales Discounts – Cash Discounts (Point
Net Sales P xx of View of Seller)
CASH
SALES PURCHASES
INVENTO
RY
OPERATING CYCLE OF A
MERCHANDISING BUSINESS –
CREDIT SALES
COLLECTIONS
CASH
ACCOUNT
S
PURCHASES
RECEIVA
BLE
SALES INVENTO
RY
SOURCE
DOCUMENTS
SALES INVOICE
Is prepared by the seller of goods and
sent to the buyer. This contains the name
and address of the buyer, the date of sale
and information – quantity, description
and price- about the goods sold. It also
specifies the amount of sales and the
transportation and payment terms.
BILL OF LADING
Is a document issued by the carrier – a
trucking, shipping or airline – that
specifies the contractual conditions and
terms of delivery such as freight terms,
time, place and the person named to
receive the goods.
STATEMENT OF ACCOUNT
Is a formal
notice to the
debtor
detailing the
accounts
already due.
OFFICIAL RECEIPT
Evidences the receipt of cash by the
seller or the authorized representative. It
notes the invoices paid and other details
of payment.
DEPOSIT SLIPS
Are printed forms with depositor’s name, account
number and space for details of the deposit. A
validated deposit slip indicates that cash and
checks with the supplied details were actually
deposited or credited to the account holder.
A validated deposit slip indicates that cash and
checks with the supplied details were actually
deposited or credited to the account holder.
CHECK
Is a written order to a bank by the
depositor to pay the amount specified in
the check from his checking account to
the person named in the check. The
entity issuing the check is the payor
while the receiver is the payee.
CREDIT MEMORANDUM
Is a form used by the seller to notify
the buyer that his account is being
decreased due to errors or other
factors requiring adjustments.
PURCHASE REQUISITION
Is a written request to the purchaser
of an entity from an employee or
user department of the same entity
that goods be purchased.
PURCHASE ORDER
Is an authorization made by the buyer to
the seller to deliver the merchandise as
detailed in the form.
RECEIVING REPORT
Is a document containing information
about goods received form a vendor, it
formally records the quantities and
description of the goods delivered.
STEPS IN A PURCHASE
TRANSACTION
PURCHASE
PURCHASE
REQUISITION SALES INVOICE
ORDER
FORM
ACCOUNTS RECEIVING
PAYMENT
PAYABLE REPORT
FOB Destination,
Seller Seller
Freight Prepaid
FOB Shipping Point,
Buyer Buyer
Freight Collect
FOB Destination,
Seller Buyer
Freight Collect
FOB Shipping Point,
Buyer Seller
Freight Prepaid
TRANSPORTATION
COSTS
Freight in – shipping costs borne by the
buyer, part of the cost of the inventory
Freight Out – shipping costs borne by the
seller, part of selling expense
MERCHANDISING Gross Sales – Total Amount of
Sales that arise from sale of
Gross Sales P xx goods.
Sales Discounts (xx) Sales Discounts – Cash
Sales Returns (xx) Discounts (Point of View of
Net Sales P xx Seller)
Cost of Goods Sold (xx) Sales Returns - merchandise
Gross Profit P xx sent back by a buyer to the
Operating Expenses (xx) seller
Operating Profit P xx Cost of Goods Sold – cost of
Other Income xx inventory the entity has sold to
the customers
Other Expenses (xx)
Profit or (Loss) P xx Operating Expenses – expenses
incurred in the operation;
classified into selling and
administrative expenses
INVENTORY SYSTEMS -
PERPETUAL
The inventory account is continuously updated: at the
time of purchase, at the time of sales.
Both the inventory and cost of sales accounts receive
entries throughout the accounting period.
In the absence of appropriate technology, the
perpetual inventory system is more advisable for firms
that sell low-volume, high priced goods such as
motorcycles, jewelry and furniture.
Ending inventory should reconcile with actual physical
count.
INVENTORY SYSTEMS -
PERIODIC
It is primarily used by businesses that sell
relatively inexpensive goods and that are not yet
using computerized scanning systems to analyze
goods sold.
No entries are made to the inventory account as
the merchandise is bought and sold.
Ending Cost of
Inventory Goods
Sold