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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 6-1 The Nature of Merchandise Inventory Flow of inventory costs Effects of errors in.

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Presentation on theme: "CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 6-1 The Nature of Merchandise Inventory Flow of inventory costs Effects of errors in."— Presentation transcript:

1 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 6-1 The Nature of Merchandise Inventory Flow of inventory costs Effects of errors in costing an inventory Costing and counting the inventory Stock record for a perpetual inventory system Inventory record used for the periodic inventory

2 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Competency: Accounting Adjustments and Valuation/Inventory Planning and Distribution Objectives 38. Verify inventory quantities, using physical methods. 39. Maintain inventory records, using perpetual methods. 40. Determine cost of merchandise inventory valuation, using current costing methods. 41. Compare inventory costing methods. 42. Calculate turnover ratios. 43. Analyze obsolete, damaged, and slow-moving inventory. 44. Identify security considerations related to inventory. 2 LESSON 6-1

3 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 6-1 Cost of Merchandise Available for Sale Beginning Merchandise Inventory Net Purchases Ending Merchandise Inventory Cost of Merchandise Sold FLOW OF INVENTORY COSTS page 171

4 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 6-1 EFFECTS OF ERRORS IN COSTING AN INVENTORY page 171

5 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 6-1 4 1 4.Enter all purchase transactions. 3.Record all sales transactions. STOCK RECORD FOR A PERPETUAL INVENTORY SYSTEM page 173 1.Record the description information. 2.Write the beginning quantity. 3 2

6 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 6-1 1.Enter inventory date and item description. 2.Record stock numbers and descriptions. 3.Write the number of units on hand. 4.Record the unit price. 5.Calculate and record the total item cost. 6.Total the column. INVENTORY RECORD USED FOR THE PERIODIC INVENTORY page 174 345 6 22 11

7 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON 6-1 TERMS REVIEW consignment consignee consignor stock record stock ledger purchase order inventory record page 175

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