1. Chapter 13: Inventory & Services Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

2. Inventory & Services Merchandise inventory includes all goods owned by the business and held for sale. For tracking merchandise inventory, Joann’s Service Merchandise uses Account No. 12000, Merchandise Inventory. Peachtree uses a perpetual inventory system. In a perpetual inventory system, a merchandising business updates inventory each time an item is purchased or sold. Inventory calculations include FIFO (first in, first out), LIFO (last in, first out), and average cost methods. 13-2

3. Software Objectives, p. 523 1. Enter inventory maintenance and default information. 2. Enter inventory item information, including Sales account, Merchandise Inventory account, and Cost of Sales account. 3. Enter item codes when recording purchases and sales. 4. Enter inventory adjustments. 5. Make three backups: two for Joann’s Service Merchandise; one for the end-of- chapter exercise. 13-3

4. Web Objectives, p. 523 1. Use your Internet browser to go to the book’s website at www.mhhe.com/yacht2009. www.mhhe.com/yacht2009 Go to the Internet Activity link on the book’s website. Then, select WEB EXERCISES PART 3. Complete the third web exercise in Part 3— Accountant's World. Use a word processing program to write summaries of the websites that you visited. 13-4

5. The journal entry for purchasing four pairs of curtains from Ronald Baker Fabrics at $30 each, p. 525. Account ID Account Description DebitCredit 12000 Merchandise Inventory 120.00 20000/RBF08 Accounts Payable/ Ron Becker Fabrics 120.00 13-5

6. The journal entry for selling four pairs of curtains to Philip Merchon at $100 each, p. 525 Account ID Account Description DebitCredit 50500 Cost of Sales-Wall 120.00 11000/pm005 Accounts Receivable/ Philip Merchon 432.00 12000 Merchandise Inventory 120.00 40200Sales-Wall400.00 23100 Sales Tax Payable 32.00 13-6

7. Peachtree Tips Chapters 11 and 12 must be completed before starting Chapter 13. In Chapters 11-13, Peachtree automatically uses the average inventory method. 13-7

8. Backing Up Chapter 13 Backup Name KB Page Nos. Chapter 13 Begin 1,588 KB 533 Chapter 13 1,603 KB 546-547 Exercise 13-1 1,534 KB 551. Part 3 continues in Chapter 13. The chart below shows the size of the backups made in Chapter 13. Refer to textbook p. 402 for the chart of all the backups made in Part 3-Chapters 11, 12, 13, 14 and Project 2. 13-8

9. Chapter 13 Topics 1. Software & web objectives, p. 523 2. Cost methods, p. 524 a. Average cost, pp. 524-525 b. LIFO (Last in, First Out), pp. 525-526 c. FIFO (First in, First Out), p. 526 3. Types of Inventory Items, pp. 526-527 4. Getting Started, pp. 527-528 5. Inventory Defaults, pp. 529-530 6. Entering inventory item maintenance information, pp. 530-533 7. Backing up your data, p. 533 8. Inventory adjustments, pp. 533-535 13-9

10. Chapter 13 Topics (concluded) 8. Additional Transactions, pp. 536-537 9. Printing Reports, pp. 538-546 10. Backing up Chapter 13 data, pp. 546-547 11. Internet activity, p. 547 12. Summary and review, p. 548 a. Going to the net, p. 548 b. Short-answer questions, pp. 549-550 c. Exercise 13-1, p. 551 d. Exercise 13-2, p. 552 e. Analysis question, p. 552 f. Chapter 13 index, p. 553 f. Chapter 13 index, p. 553 13-10

11. Inventory Defaults, p. 529 From the Navigation Bar, select ; then. Select Set Up Inventory Defaults. The Inventory Item Defaults window is shown on p. 529. 13-11

12. Taxes/Shipping tab, pp. 529-530 Click on the Taxes/Shipping tab. Read the information on pages 529 and 530. Then, click to close the Inventory Item Defaults window. 13-12

13. Entering inventory item maintenance information, pp. 530-533 Read the information on page 530. Then, complete steps 1 – 5 on pp. 531-533. 13-13

14. Backing up your data, p. 533 Complete steps 1 – 6 on p. 533 to back up your data. Use Chapter 13 Begin as the back up name. 13-14

15. Inventory Adjustments, pp. 533-535 Read the Inventory Adjustment transaction, p. 533. From the Vendors & Purchases page, click. Select New Bill. Record the January 14, 2008 transaction. The Purchases/Receive Inventory window is shown on p. 534. Post, then close. 13-15

16. Inventory Adjustments (concluded), pp. 534-535 Read the transaction, p. 534. Then, complete steps 1-6 on page 535. The Inventory Adjustments window is shown on page 535. Complete step 7 on p. 535. 13-16

17. Additional Transactions, pp. 536-537 Complete the transactions on pages 536- 537. 13-17

18. Printing reports, pp. 538-546 Complete steps 1–8 on pages 538-546. Compare your reports with the ones shown on pages 538-546. 13-18

19. Backing Up Chapter 13 Data, pp. 546-547 Complete steps 1 - 7 on p. 547. The back up name is Chapter 13. 13-19

20. Glossary of Terms Chapter 13 13-20

21. Merchandise inventory, p. 523 Merchandise inventory includes all goods owned by the business and held for resale. The inventory account for Joann’s Service Merchandise is Account No. 12000, Merchandise Inventory. 13-21

22. Merchandising business, p. 523 Retail stores that resell goods and/or perform services. 13-22

23. FIFO, p. 523 The FIFO (first in, first out) inventory method assumes that the items in the beginning inventory are sold first. 13-23

24. LIFO, p. 523 The LIFO (last in, first out) inventory method assumes that the goods received last are sold first. 13-24

25. Internet Activity, p. 547 1 Go to the book’s website at www.mhhe.com/yacht2009. www.mhhe.com/yacht2009 2 Link to Student Edition. 3 In the Course-wide Content list, link to Part 3 Internet Activities for Chapters 11-14. Open or Save. (You can also choose Chapter 13, then link to Internet Activities. If you Choose a Chapter, observe that other chapter-specific links are available; for example, Quizzes, PowerPoints, and Going to the Net Exercises.). 4 Complete the Accountant’s World-Chapter 13 exercise. Read steps 1 and 2. 5 Follow the steps shown on the book’s website to complete this Internet activity. 6 Using a word processing program, write a brief summary of what you find. Include all appropriate website addresses. 13-25

26. Going to the Net, p. 548 Access the Small Business Knowledge Base website at http://www.bizmove.com/finance/m3d3.htm. Scroll down the window to Merchandise Inventories: Perpetual Inventory. Answer these questions about perpetual inventory. http://www.bizmove.com/finance/m3d3.htm 1. What is a perpetual inventory at retail? 2. When is a physical count of inventory necessary? 13-26