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Chapter 14:
Inventory & Services
McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Inventory & Services
Merchandise inventory includes all goods owned by the business and held for sale. For tracking merchandise inventory, Cynthia’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.
14-2
Peachtree Tips
Chapters 12 and 13 must be
completed before starting Chapter 14.
In Chapters 12-15, Peachtree uses the
average inventory method.
14-3
Backups and Saved Files, p. 427
Backup (.ptb extension)
Excel (.xlsx) and Adobe (.pdf) KB
Page
Nos.
Chapter 14 Begin.ptb 1,091 KB 559
Chapter 14.ptb 1,119 KB 572
Chapter 14_CL_VL_CGSJ_IAJ_IPR_GLTB.xlsx 32 KB 572-573
Exercise 14-1.ptb 993 KB 575
Exercise 14-2_CRJ_PJ_CGSJ_IAJ_IPR_GLTB.xlsx 30 KB 576
Exercise 14-2_Cash Receipts Journal.pdf 7 KB 576
Exercise 14-2_Purchase Journal.pdf 6 KB 576
Exercise 14-2_Cost of Goods Sold Journal.pdf 6 KB 576
Exercise 14-2_Inventory Adjustment Journal.pdf 5 KB 576
Exercise 14-2_Inventory Profitability Report.pdf 6 KB 576
Exercise 14-2_General Ledger Trial Balance.pdf 6 KB 576
14-4
Glossary of Terms
Chapter 14
14-5
Merchandise inventory, p. 549
Merchandise inventory includes all goods
owned by the business and held for
resale.
The inventory account for Cynthia’s
Service Merchandise is Account No.
12000, Merchandise Inventory.
14-6
Merchandising business, p. 549
Retail stores that resell goods and/or
perform services.
14-7
FIFO, p. 549
The FIFO (first in, first out) inventory
method assumes that the items in the
beginning inventory are sold first.
14-8
LIFO, p. 549
The LIFO (last in, first out) inventory
method assumes that the goods received
last are sold first.
14-9
Inventory Adjustment, p. 561
In Chapter 14, you enter an inventory
adjustment for damaged merchandise.
14-10
Going to the Net, p. 573
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.
1. What is a perpetual inventory at retail?
2. When is a physical count of inventory
necessary?
14-11
Analysis Question, p. 576
Which one of Cynthia’s Service Merchandise items
shows the highest gross profit percentage? Why?
The Inventory Profitability Report shows that wall
coverings show the highest gross profit percentage at
70%. The reason is that wall coverings are purchased for
$30 and sold for $100, a 70% profit. (The cost of the item
and sale price of the item is shown on the Maintain
Inventory items window; Item ID, 002wall.)
14-12
Assessment Rubric, p. 577Date Transaction
Navigation
Center/Module
Task
Window
Journal
Dr./Cr.
1/30 Two tool kits purchased from
Carson Phillips Tools on 1/27
were damaged by the owner.
Inventory & Services;
Inventory Adjustments
Inventory
Inventory
Adjustments
Inventory Adjustment Journal
Dr. 50500, Cost of Sales-Tools,
$60
Cr. 12000, Merchandise
Inventory, $60
1/31 Cash sales in the amount of
$4,752, ($4,400 plus $352 sales
taxes) were deposited at Caliber
Bank: 20 tool kits, $1,700; 18
hardware sets, 2,700.
Customers & Sales,
Receive Money,
Receive Money From
Customer
Accounts Receivable
Receipts Cash Receipts Journal
Dr. 50500, Cost of Sales-Tools,
$600
Dr. 50000, Cost of Sales-
Hardware, $900
Dr. 10200, Caliber Bank, $4,752
Cr. 23100, Sales Tax Payable,
$352
Cr. 40200, Sales-Tools, $1,700
Cr. 12000, Merchandise
Inventory, $600
Cr. 40000, Sales-Hardware,
$2,700
Cr. 12000, Merchandise
Inventory, $900
14-13
Online Learning Center
Go online to www.mhhe.com/yacht2012 for additional resources. Link
to Student Edition, select Chapter 14.
o Interactive Testing
o Glossary of Terms
o Feature Quiz
o Narrated PowerPoints
o Assessment Rubric
o Going to the Net
o QA Templates
14-14