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

Chapter 13: Chapter 13: Inventory & ServicesInventory & Services

Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.reserved.

McGraw-Hill/McGraw-Hill/IrwinIrwin

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

13-13-22

Software Objectives, p. 523Software Objectives, p. 5231.1. Enter inventory maintenance and default Enter inventory maintenance and default

information.information.2.2. Enter inventory item information, including Enter inventory item information, including

Sales account, Merchandise Inventory Sales account, Merchandise Inventory account, and Cost of Sales account.account, and Cost of Sales account.

3.3. Enter item codes when recording purchases Enter item codes when recording purchases and sales.and sales.

4.4. Enter inventory adjustments.Enter inventory adjustments.5.5. Make three backups: two for Joann’s Make three backups: two for Joann’s

Service Merchandise; one for the end-of-Service Merchandise; one for the end-of-chapter exercise.chapter exercise.

13-13-33

Web Objectives, p. 523Web Objectives, p. 5231.1. Use your Internet browser to go to the book’s Use your Internet browser to go to the book’s

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

13-13-44

The journal entry for purchasing four pairs of The journal entry for purchasing four pairs of curtains from Ronald Baker Fabrics at $30 curtains from Ronald Baker Fabrics at $30 each, p. 525.each, p. 525.

Account IDAccount ID Account DescriptionAccount Description DebitDebit CreditCredit

1200012000 Merchandise InventoryMerchandise Inventory 120.00120.00

20000/20000/

RBF08RBF08

Accounts Payable/Accounts Payable/

Ron Becker FabricsRon Becker Fabrics 120.00120.00

13-13-55

The journal entry for selling four pairs of The journal entry for selling four pairs of curtains to Philip Merchon at $100 each, p. 525curtains to Philip Merchon at $100 each, p. 525

Account IDAccount ID Account DescriptionAccount Description DebitDebit CreditCredit

5050050500 Cost of Sales-WallCost of Sales-Wall 120.00120.00

11000/pm00511000/pm005 Accounts Receivable/Accounts Receivable/

Philip MerchonPhilip Merchon 432.00432.00

1200012000 Merchandise InventoryMerchandise Inventory 120.00120.00

4020040200 Sales-WallSales-Wall 400.00400.00

2310023100 Sales Tax PayableSales Tax Payable 32.0032.00

13-13-66

Peachtree TipsPeachtree Tips

Chapters 11 and 12 Chapters 11 and 12 mustmust be completed be completed before starting Chapter 13. before starting Chapter 13.

In Chapters 11-13, Peachtree In Chapters 11-13, Peachtree automatically uses the average automatically uses the average inventory method.inventory method.

13-13-77

Backing Up Chapter 13Backing Up Chapter 13

Backup Name Backup Name

KBKB Page Nos.Page Nos.

Chapter 13 BeginChapter 13 Begin 1,588 KB1,588 KB 533533

Chapter 13Chapter 13 1,603 KB1,603 KB 546-547546-547

Exercise 13-1Exercise 13-1 1,534 KB1,534 KB 551551.

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.

13-13-88

Chapter 13 TopicsChapter 13 Topics1.1. Software & web objectives, p. 523Software & web objectives, p. 5232.2. Cost methods, p. 524Cost methods, p. 524

a. Average cost, pp. 524-525a. Average cost, pp. 524-525b. LIFO (Last in, First Out), pp. 525-526b. LIFO (Last in, First Out), pp. 525-526c. FIFO (First in, First Out), p. 526c. FIFO (First in, First Out), p. 526

3.3. Types of Inventory Items, pp. 526-527Types of Inventory Items, pp. 526-5274.4. Getting Started, pp. 527-528Getting Started, pp. 527-5285.5. Inventory Defaults, pp. 529-530Inventory Defaults, pp. 529-5306.6. Entering inventory item maintenance Entering inventory item maintenance

information, pp. 530-533information, pp. 530-5337.7. Backing up your data, p. 533Backing up your data, p. 5338.8. Inventory adjustments, pp. 533-535Inventory adjustments, pp. 533-535

13-13-99

Chapter 13 Topics (concluded)Chapter 13 Topics (concluded)8.8. Additional Transactions, pp. 536-537Additional Transactions, pp. 536-5379.9. Printing Reports, pp. 538-546Printing Reports, pp. 538-54610.10. Backing up Chapter 13 data, pp. 546-547Backing up Chapter 13 data, pp. 546-54711.11. Internet activity, p. 547Internet activity, p. 54712.12. Summary and review, p. 548Summary and review, p. 548

a. Going to the net, p. 548a. Going to the net, p. 548b. Short-answer questions, pp. 549-550b. Short-answer questions, pp. 549-550c. Exercise 13-1, p. 551c. Exercise 13-1, p. 551d. Exercise 13-2, p. 552d. Exercise 13-2, p. 552e. Analysis question, p. 552e. Analysis question, p. 552

f. Chapter 13 index, p. 553f. Chapter 13 index, p. 553

13-13-1010

Inventory Defaults, p. 529Inventory Defaults, p. 529

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

13-13-1111

Taxes/Shipping tab, pp. 529-530Taxes/Shipping tab, pp. 529-530Click on the Taxes/Click on the Taxes/SShipping tab.hipping tab.

Read the information on pages 529 and 530. Then, click Read the information on pages 529 and 530. Then, click <OK> to close the Inventory Item Defaults window.<OK> to close the Inventory Item Defaults window.

13-13-1212

Entering inventory item maintenance Entering inventory item maintenance information, pp. 530-533information, pp. 530-533

Read the information on page 530. Then, Read the information on page 530. Then, complete steps 1 – 5 on pp. 531-533.complete steps 1 – 5 on pp. 531-533.

13-13-1313

Backing up your data, p. 533Backing up your data, p. 533

Complete steps 1 – 6 on p. 533 to back up Complete steps 1 – 6 on p. 533 to back up your data.your data.

Use Use Chapter 13 BeginChapter 13 Begin as the back up as the back up name.name.

13-13-1414

Inventory Adjustments, pp. 533-535Inventory Adjustments, pp. 533-535

13-13-1515

Inventory Adjustments (concluded),Inventory Adjustments (concluded),pp. 534-535pp. 534-535

Read the transaction, p. 534. Then, complete steps 1-6 Read the transaction, p. 534. Then, complete steps 1-6 on page 535. The Inventory Adjustments window is on page 535. The Inventory Adjustments window is shown on page 535.shown on page 535.

Complete step 7 on p. 535.Complete step 7 on p. 535.

13-13-1616

Additional Transactions, pp. 536-537Additional Transactions, pp. 536-537

Complete the transactions on pages 536-Complete the transactions on pages 536-537.537.

13-13-1717

Printing reports, pp. 538-546Printing reports, pp. 538-546

Complete steps 1–8 on pages 538-546.Complete steps 1–8 on pages 538-546.

Compare your reports with the ones Compare your reports with the ones shown on pages 538-546.shown on pages 538-546.

13-13-1818

Backing Up Chapter 13 Data, pp. 546-547Backing Up Chapter 13 Data, pp. 546-547

Complete steps 1 - 7 on p. 547.Complete steps 1 - 7 on p. 547.The back up name is The back up name is Chapter 13Chapter 13..

13-13-1919

Glossary of TermsGlossary of TermsChapter 13Chapter 13

13-13-2020

Merchandise inventory, p. 523Merchandise inventory, p. 523

Merchandise inventory includes all goods Merchandise inventory includes all goods owned by the business and held for owned by the business and held for resale.resale.

The inventory account for Joann’s The inventory account for Joann’s Service Merchandise is Account No. Service Merchandise is Account No. 12000, Merchandise Inventory.12000, Merchandise Inventory.

13-13-2121

Merchandising business, p. 523Merchandising business, p. 523

Retail stores that resell goods and/or Retail stores that resell goods and/or perform services.perform services.

13-13-2222

FIFO, p. 523FIFO, p. 523

The FIFO (first in, first out) inventory The FIFO (first in, first out) inventory method assumes that the items in the method assumes that the items in the beginning inventory are sold first.beginning inventory are sold first.

13-13-2323

LIFO, p. 523LIFO, p. 523

The LIFO (last in, first out) inventory The LIFO (last in, first out) inventory method assumes that the goods received method assumes that the goods received last are sold first.last are sold first.

13-13-2424

Internet Activity, p. 547Internet Activity, p. 54711 Go to the book’s website at Go to the book’s website at www.mhhe.com/yacht2009.

22 Link to Student EditionLink to Student Edition..

33 In the Course-wide Content list, link to Part 3 Internet Activities for 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 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 link to Internet Activities. If you Choose a Chapter, observe that other chapter-specific links are available; for example, Quizzes, PowerPoints, chapter-specific links are available; for example, Quizzes, PowerPoints, and Going to the Net Exercises.).and Going to the Net Exercises.).

44 Complete the Accountant’s World-Chapter 13 exercise. Read steps 1 Complete the Accountant’s World-Chapter 13 exercise. Read steps 1 and 2. and 2.

55 Follow the steps shown on the book’s website to complete this Internet Follow the steps shown on the book’s website to complete this Internet activity.activity.

66 Using a word processing program, write a brief summary of what you Using a word processing program, write a brief summary of what you find. Include all appropriate website addresses.find. Include all appropriate website addresses.

13-13-2525

Going to the Net, p. 548Going to the Net, p. 548Access the Small Business Knowledge Access the Small Business Knowledge Base website at 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.

1.1. What is a perpetual inventory at retail?What is a perpetual inventory at retail?

2.2. When is a physical count of inventory When is a physical count of inventory necessary? necessary?

13-13-2626