Chapter 5 Merchandising Flashcards
perpetual entry for purchase returns and allowances
Dr. Accounts Payable
Cr. Merchandise Inventory
subsidiary ledger & control account
subsidiary ledge - a group of accounts that share a common characteristic (e.g. pencils, erasers, pens)
control account - general ledger account that summarizes the subsidiary ledger data (e.g. Merchandise Inventory)
perpetual entry for purchase discounts
Dr. Accounts Payable
Cr. Merchandise Inventory (value of merch. decreases)
Cr. Cash
perpetual entry for freight in and freight out
Freight in: Dr. Merchandise Inventory Cr. Cash Freight out: Dr. Freight out Cr. Cash
perpetual entry for recording sale
Dr. Accounts Receivable
COGS
Cr. Sales
Merchandise Inventory
perpetual entry for sales returns and allowances
Dr. Sales R&A Cr. A/R If goods are to be resold a second entry is required: Dr. Merchandise Inventory Cr. COGS
perpetual entry for sales discounts
Dr. Cash
Sales discounts
Cr. A/R
Gross profit margin
company’s gross profit expressed as percentage;
Gross profit / Net sales = Gross profit margin
Profit margin
profit expressed as a percentage of sales;
Profit / Net sales = Profit margin
periodic entry for purchase of merchandise
Dr. Purchases
Cr. A/P
periodic entry to record freight costs
Dr. Freight In/Out
Cr. Cash
periodic entry for purchase r&a
Dr. A/P
Cr. Purchase R&A
periodic entry for purchase discounts
Dr. A/P
Cr. Purchase discounts
Cash
periodic entry for sales r&a
Dr. Sales R&A
Cr. A/R
periodic entry for sales discounts
Dr. Cash
Sales discounts
Cr. A/R
