1、Chapter 5-1Inventories:Basic Valuation Methods&Special Valuation MethodsIntermediate Accounting12th EditionKieso,Weygandt,and Warfield Prepared by Coby Harmon,University of California,Santa BarbaraChapter 5-2Learning ObjectivesChapter 5-3Learning ObjectivesChapter 5-4Typically represent the largestc
2、urrent asset of manufacturingand retail firms.For many companies inventoriesare a significant portionof total assets as well.Inventory methods and managementpractices can becomeprofit-enhancing tools.Importance of InventoriesChapter 5-5Inventory CategoriesChapter 5-6Flow of Inventory CostsMerchandis
3、ing CompanyManufacturing CompanyChapter 5-7Merchandising CompanyCost of Goods SoldAccounts Payable(or Cash)Merchandise InventoryGoods PurchasedGoods SoldFlow of Inventory CostsChapter 5-8Manufacturing CompanyAccounts Payable(or Cash)Raw Materials InventoryMaterials PurchasedMaterials Used in Product
4、ionTo Work in Process InventoryFlow of Inventory CostsChapter 5-9Manufacturing CompanyDirect LaborActual Direct LaborManufacturing (Factory)OverheadActual Mfg.Over-headOverhead Applied to Production To Work in Process InventoryLabor Charged to Production To Work in Process InventoryFlow of Inventory
5、 CostsChapter 5-10Manufacturing CompanyWork in Process InventoryMaterials UsedDirect LaborOverhead AppliedFinished Goods InventoryGoods Finished(Manufactured)Goods Sold to Cost of Goods SoldFlow of Inventory CostsChapter 5-11Items Included in InventoryChapter 5-12Who Owns the Inventory?Chapter 5-13C
6、omponents of Inventory CostChapter 5-14Under the gross price method,a company records the purchase at the gross price,and records the amount of the discount in the accounting system only if the discount is taken.Under the net price method,a company records the purchase at its net price,and records t
7、he amount of the discount in the accounting system only if the discount is not taken.Purchases DiscountsChapter 5-15To record the purchaseInventory(or Purchases)1,000Accounts Payable1,000A company purchases$1,000 of goods under terms of 1/10,n/30.To record payment within the discount period:Accounts
8、 Payable1,000Purchases Discounts Taken10Cash990To record payment after the discount period:Accounts Payable1,000Cash1,000Purchases Discounts-Gross Price MethodChapter 5-16To record the purchase:Inventory(or Purchases)990Accounts Payable990A company purchases$1,000 of goods under terms of 1/10,n/30.T
9、o record payment within the discount period:Accounts Payable990Cash990To record payment after the discount period:Accounts Payable990Purchases Discounts Lost10Cash1,000Purchases Discounts Lost are treated as a financing expense in the Other section of the income statement.Purchases Discounts-Net Pri
10、ce MethodChapter 5-17Net Price MethodAdjusting entry at the end of period if discount has expired and invoice is unpaid:Purchases Discounts Lost10Accounts Payable10A company purchases$1,000 of goods under terms of 1/10,n/30.Purchases DiscountsChapter 5-18PERIODIC METHODvs.PERPETUAL METHODInventory R
11、ecording MethodsChapter 5-19A company using a periodic system does not maintain a continuous record of the physical quantities on hand.Alternative Inventory SystemsChapter 5-20Calculating Cost of Goods Sold(COGS)Chapter 5-21Perpetual Inventory SystemPeriodicInventory SystemComparison of SystemsChapt
12、er 5-22Transaction or EventPeriodic InventoryPerpetual InventoryRoutine purchases of various inventory itemsCosts debited to purchases accountCosts debited to inventory accountItems removed from inventory for use in productionNo accounting entries madeDebit WIP inventory and credit inventory account
13、End-of-period accounting entries and related activitiesPhysical count of inventory to determine cost of goods soldNo separate determination of cost of goods sold necessaryPeriodic versus PerpetualChapter 5-23Periodic SystemChapter 5-24The following is a partial adjusted trial balance:AccountDebitCre
14、ditInventory 1/1/X6175,000$Purchases350,000 Purchases Discount22,000$Purchase Returns&Allowances6,000 Sales1,250,000 Advertising Expense7,500 Salaries Expense80,000 Utilities Expense20,000 12/31/X6 ending inventory was$125,000Prepare the closing entries.Periodic SystemChapter 5-25 GENERAL JOURNALPag
15、e 1DateDescriptionPRDebitCreditPeriodic SystemChapter 5-26 GENERAL JOURNALPage 1DateDescriptionPRDebitCreditCost of Goods Sold372,000Inventory,12/31/X6125,000Purchases Discount22,000Purchase Returns&Allowances6,000 Purchases350,000 Inventory,1/1/X6175,000To close accounts to COGSPeriodic SystemChapt
16、er 5-27 GENERAL JOURNALPage 1DateDescriptionPRDebitCreditSales1,250,000 Income Summary 1,250,000To close account Income Summary479,500 Cost of Goods Sold372,000 Advertising Expense7,500 Salaries Expense80,000 Utilities Expense20,000To close accountsPeriodic SystemChapter 5-28 GENERAL JOURNALPage 1Da
17、teDescriptionPRDebitCreditIncome Summary770,500 Retained Earnings 770,500To close account Periodic SystemChapter 5-29Periodic SystemChapter 5-30Perpetual SystemChapter 5-31Perpetual SystemChapter 5-32 Cable TV,Inc.used the to record a purchase on March 23 for$50,000 with terms of 2/10,n/30.Payment w
18、as made on April 1.Which of the following is included on the April 1 entry?a.Credit Purchases Discount$1,000b.Debit Purchases Discount$1,000c.Credit Inventory$1,000d.Debit Inventory$1,000Perpetual SystemChapter 5-33 Cable TV,Inc.used the to record a purchase on March 23 for$50,000 with terms of 2/10
19、,n/30.Payment was made on April 1.Which of the following is included on the April 1 entry?a.Credit Purchases Discount$1,000b.Debit Purchases Discount$1,000c.Credit Inventory$1,000d.Debit Inventory$1,000Perpetual SystemChapter 5-34 GENERAL JOURNALPage 1DateDescriptionPRDebitCredit3/23Inventory50,000
20、Accounts Payable50,000To record purchase at gross4/1Accounts Payable50,000 Inventory 1,000 Cash49,000To record paymentPerpetual SystemChapter 5-35Periodic SystemChapter 5-36Periodic SystemChapter 5-37 GENERAL JOURNALPage 1DateDescriptionPRDebitCredit3/23Purchases49,000 Accounts Payable49,000To recor
21、d purchase at net4/5Accounts Payable49,000Purchases Discounts Forfeited1,000 Cash50,000To record paymentRepresents a finance charge and is included with misc.expensesPeriodic SystemChapter 5-38Perpetual SystemChapter 5-39Inventory Values-Unit CostChapter 5-40Inventory Cost Flow MethodsChapter 5-41Sp
22、ecific Cost IdentificationChapter 5-42100 units$10 per unitApr.1Apr.10Apr.2080 units$11 per unit70 units$12 per unitOn April 27,sold 90 units from the beginning inventory,50 units from the April 10 purchase.Specific IdentificationChapter 5-43100 units$10 per unitApr.1Apr.10Apr.2080 units$11 per unit
23、Apr.200 units$12 per unit90 units$10 per unitApr.150 units$11 per unitApr.1070 units$12 per unit10 units$10 per unit30 units$11 per unit70 units$12 per unitSold 90Sold 50Ending inventory.=$100=330=840$1,270Cost of Goods Sold.$1,450=$900=550=0Specific IdentificationChapter 5-44100 units$10 per unitAp
24、r.1Apr.10Apr.2030 units$11 per unitApr.20Apr.1Apr.1070 units$12 per unit10 units$10 per unit80 units$11 per unit70 units$12 per unitEnding inventory.Goods available for sale.=$1,000=880=840$2,720=$100=330=840$1,270$1,480Cost of Goods Sold.Specific IdentificationChapter 5-45Average Cost MethodChapter
25、 5-46Weighted-AveragePeriodic MethodChapter 5-47The following schedule shows the mouse pad inventory for Computers,Inc.for September.The physical inventory count shows mouse pads in ending inventory.Weighted-AveragePeriodic MethodChapter 5-48Computer,Inc.Mouse Pad InventoryDateUnits$/UnitTotalBeg.In
26、ventory1,000$5.25$5,250.00 9/3100 5.30 530.00 9/15150 5.60 840.00 9/21200 5.80 1,160.00 9/29100 5.90 590.00 Goods Available for Sale1,550$8,370.00Ending Inventory800 Cost of Goods SoldWeighted-AveragePeriodic MethodChapter 5-49Computer,Inc.Mouse Pad InventoryDateUnits$/UnitTotalBeg.Inventory1,000$5.
27、25$5,250.00 9/3100 5.30 530.00 9/15150 5.60 840.00 9/21200 5.80 1,160.00 9/29100 5.90 590.00 Goods Available for Sale1,550$8,370.00Ending Inventory800 Cost of Goods Sold750 GAS 1,550-EI(800)COGS 750Weighted-AveragePeriodic MethodChapter 5-50Computer,Inc.Mouse Pad InventoryDateUnits$/UnitTotalBeg.Inv
28、entory1,000$5.25$5,250.00 9/3100 5.30 530.00 9/15150 5.60 840.00 9/21200 5.80 1,160.00 9/29100 5.90 590.00 Goods Available for Sale1,550$8,370.00Ending Inventory800 Cost of Goods Sold750$8,370 1,550 =$5.40 weighted-averageWeighted-AveragePeriodic MethodChapter 5-51$8,370 1,550 =$5.40 weighted-averag
29、eWeighted-AveragePeriodic MethodChapter 5-52The following schedule shows the mouse pad inventory for Computers,Inc.for September.The physical inventory count shows mouse pads in ending inventory.Moving-AveragePerpetual ExampleChapter 5-53Moving-AveragePerpetual ExampleChapter 5-54 Computer,Inc.Mouse
30、 Pad InventoryDateUnitsUnit CostTotalBI1,000 5.25$5,250.00$9/3100 5.30 530.00 9/15150 5.60 840.00 9/21200 5.80 1,160.00 9/29100 5.90 590.00 Goods available for sale1,550 8,370.00$Ending inventory800 Cost of goods sold750 Moving-AveragePerpetual ExampleChapter 5-55Moving-AveragePerpetual ExampleChapt
31、er 5-56Computer,Inc.Mouse Pad InventoryExplanationUnitsCost/UnitTotalBeg.Inventory1,000 5.25$5,250.00$Sale 9/1(300)5.25 (1,575.00)Available for sale700 5.25 3,675.00 Moving-AveragePerpetual ExampleChapter 5-57Computer,Inc.Mouse Pad InventoryExplanationUnitsCost/UnitTotalBeg.Inventory1,000 5.25$5,250
32、.00$Sale 9/1(300)5.25 (1,575.00)Available for sale700 5.25 3,675.00 Purchase 9/3100 5.30 530.00 Available for sale800 4,205.00 Moving-AveragePerpetual ExampleChapter 5-58Computer,Inc.Mouse Pad InventoryExplanationUnitsCost/UnitTotalBeg.Inventory1,000 5.25$5,250.00$Sale 9/1(300)5.25 (1,575.00)Availab
33、le for sale700 5.25 3,675.00 Purchase 9/3100 5.30 530.00 Available for sale800 5.25625 4,205.00$4,205.00 800 =$5.25625/unitMoving-AveragePerpetual ExampleChapter 5-59Computer,Inc.Mouse Pad InventoryExplanationUnitsCost/UnitTotalBeg.Inventory1,000 5.25$5,250.00$Sale 9/1(300)5.25 (1,575.00)Available f
34、or sale700 5.25 3,675.00 Purchase 9/3100 5.30 530.00 Available for sale800 5.25625 4,205.00 Sale 9/10(200)5.25625 (1,051.25)Available for sale600 5.25625 3,153.75 Moving-AveragePerpetual ExampleChapter 5-60Computer,Inc.Mouse Pad InventoryExplanationUnitsCost/UnitTotalBeg.Inventory1,000 5.25$5,250.00
35、$Sale 9/1(300)5.25 (1,575.00)Available for sale700 5.25 3,675.00 Purchase 9/3100 5.30 530.00 Available for sale800 5.25625 4,205.00 Sale 9/10(200)5.25625 (1,051.25)Available for sale600 5.25625 3,153.75 Purchase 9/15150 5.60 840.00 Available for sale750 5.325 3,993.75$3,993.75 750 =$5.325Moving-Aver
36、agePerpetual ExampleChapter 5-61Computer,Inc.Mouse Pad InventoryExplanationUnitsCost/UnitTotalBeg.Inventory1,000 5.25$5,250.00$Sale 9/1(300)5.25 (1,575.00)Available for sale700 5.25 3,675.00 Purchase 9/3100 5.30 530.00 Available for sale800 5.25625 4,205.00 Sale 9/10(200)5.25625 (1,051.25)Available
37、for sale600 5.25625 3,153.75 Purchase 9/15150 5.60 840.00 Available for sale750 5.325 3,993.75 Purchase 9/21200 5.80 1,160.00 Available for sale950 5.425 5,153.75 Moving-AveragePerpetual ExampleChapter 5-62Moving-AveragePerpetual ExampleChapter 5-63Computer,Inc.Mouse Pad InventoryExplanationUnitsCos
38、t/UnitTotalAvailable for sale750 5.325$3,993.75$Purchase 9/21200 5.80 1,160.00 Available for sale950 5.425 5,153.75 Thats better.Moving-AveragePerpetual ExampleChapter 5-64Computer,Inc.Mouse Pad InventoryExplanationUnitsCost/UnitTotalAvailable for sale750 5.325$3,993.75$Purchase 9/21200 5.80 1,160.0
39、0 Available for sale950 5.425 5,153.75 Purchase 9/29100 5.90 590.00 Available for sale1,050 5.47024 5,743.75 Moving-AveragePerpetual ExampleChapter 5-65Computer,Inc.Mouse Pad InventoryExplanationUnitsCost/UnitTotalAvailable for sale750 5.325$3,993.75$Purchase 9/21200 5.80 1,160.00 Available for sale
40、950 5.425 5,153.75 Purchase 9/29100 5.90 590.00 Available for sale1,050 5.47024 5,743.75 Sale 9/30(250)5.47024 (1,367.56)Ending inventory800 5.47024 4,376.19 Ending inventory is$4,376.19.Lets summarizecost of goods sold during September.Moving-AveragePerpetual ExampleChapter 5-66Computer,Inc.Cost of
41、 Goods Sold in SeptemberDate of saleUnitsCost/UnitTotal9/1300 5.25$1,575.00$9/10200 5.25625 1,051.25 9/30250 5.47024 1,367.56 Total750 3,993.81 Cost of ending inventory$4,376.19Cost of goods sold 3,993.81Goods available for sale$8,370.00Moving-AveragePerpetual ExampleChapter 5-67Average Cost Evaluat
42、ionChapter 5-68First-In,First-OutChapter 5-69First-In,First-OutChapter 5-70Evaluation of FIFOChapter 5-71Evaluation of FIFOChapter 5-72Which of the following statements is true concerning the use of the FIFO inventory costing method?a.Ending inventory includes costs from the most recent purchases.b.
43、COGS includes costs from the oldest purchases.c.FIFO can be used even if the actual flow of the inventory is not on a FIFO basis.d.All of the above statements are true.FIFO-ExampleChapter 5-73Which of the following statements is true concerning the use of the FIFO inventory costing method?a.Ending i
44、nventory includes costs from the most recent purchases.b.COGS includes costs from the oldest purchases.c.FIFO can be used even if the actual flow of the inventory is not on a FIFO basis.d.All of the above statements are true.FIFO-ExampleChapter 5-74The following schedule shows the mouse pad inventor
45、y for Computers,Inc.for September.The physical inventory count shows mouse pads in ending inventory.FIFO-ExampleChapter 5-75 Computer,Inc.Mouse Pad InventoryDateUnitsUnit CostTotalBI1,000 5.25$5,250.00$9/3100 5.30 530.00 9/15150 5.60 840.00 9/21200 5.80 1,160.00 9/29100 5.90 590.00 Goods available f
46、or sale1,550 8,370.00$Ending inventory800 Cost of goods sold750 FIFO-ExampleChapter 5-76 Computer,Inc.Mouse Pad InventoryDateUnitsUnit CostTotalBI1,000 5.25$5,250.00$9/3100 5.30 530.00 9/15150 5.60 840.00 9/21200 5.80 1,160.00 9/29100 5.90 590.00 Goods available for sale1,550 8,370.00$Ending invento
47、ry800 Cost of goods sold750 FIFO ending inventory is calculated using the cost of the newest purchases.Start with 9/29 and then add other purchases until you reach the number of units in ending inventory.FIFO-ExampleChapter 5-77Computer,Inc.Mouse Pad InventoryDateBeg.Inv.PurchasesEnd Inv.Cost of Goo
48、ds Sold9/29100$5.90100$5.90Units100FIFO-ExampleChapter 5-78Computer,Inc.Mouse Pad InventoryDateBeg.Inv.PurchasesEnd Inv.Cost of Goods Sold9/21200$5.80200$5.809/29100$5.90100$5.90Units300FIFO-ExampleChapter 5-79Computer,Inc.Mouse Pad InventoryDateBeg.Inv.PurchasesEnd Inv.Cost of Goods Sold9/15150$5.6
49、0150$5.609/21200$5.80200$5.809/29100$5.90100$5.90Units450FIFO-ExampleChapter 5-80Computer,Inc.Mouse Pad InventoryDateBeg.Inv.PurchasesEnd Inv.Cost of Goods Sold9/3100$5.30100$5.309/15150$5.60150$5.609/21200$5.80200$5.809/29100$5.90100$5.90Units550FIFO-ExampleChapter 5-81Computer,Inc.Mouse Pad Invent
50、oryDateBeg.Inv.PurchasesEnd Inv.Cost of Goods SoldBI1000$5.25250$5.259/3100$5.30100$5.309/15150$5.60150$5.609/21200$5.80200$5.809/29100$5.90100$5.90Units800FIFO-ExampleChapter 5-82Computer,Inc.Mouse Pad InventoryDateBeg.Inv.PurchasesEnd Inv.Cost of Goods SoldBI1000$5.25750$5.25250$5.259/3100$5.30100
