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    MERCHANDISING

    Uploaded by

    Kisha Nicole R. Enanoria
    A merchandising business generates income by buying goods from manufacturers and selling them at a profit. There are two main types of merchandisers: wholesalers who buy goods in bulk from manufacturers and sell to retailers, and retailers who sell directly to end users. Merchandising involves two main activities - buying and selling goods. Transactions are recorded from the point of view of the buyer and seller through documents like purchase orders, receiving reports, and debit memos. Common accounts used include Purchases, Purchase Returns and Allowances, Purchase Discounts, and Freight-In. A business can use either a periodic or perpetual inventory system to record inventory transactions.

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    © All Rights Reserved
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    MERCHANDISING

    Uploaded by

    Kisha Nicole R. Enanoria
    122 views74 pages
    A merchandising business generates income by buying goods from manufacturers and selling them at a profit. There are two main types of merchandisers: wholesalers who buy goods in bulk from manufacturers and sell to retailers, and retailers who sell directly to end users. Merchandising involves two main activities - buying and selling goods. Transactions are recorded from the point of view of the buyer and seller through documents like purchase orders, receiving reports, and debit memos. Common accounts used include Purchases, Purchase Returns and Allowances, Purchase Discounts, and Freight-In. A business can use either a periodic or perpetual inventory system to record inventory transactions.

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    A merchandising business generates income by buying goods from manufacturers and selling them at a profit. There are two main types of merchandisers: wholesalers who buy goods in bulk from manufacturers and sell to retailers, and retailers who sell directly to end users. Merchandising involves two main activities - buying and selling goods. Transactions are recorded from the point of view of the buyer and seller through documents like purchase orders, receiving reports, and debit memos. Common accounts used include Purchases, Purchase Returns and Allowances, Purchase Discounts, and Freight-In. A business can use either a periodic or perpetual inventory system to record inventory transactions.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    122 views74 pages

    MERCHANDISING

    Uploaded by

    Kisha Nicole R. Enanoria
    A merchandising business generates income by buying goods from manufacturers and selling them at a profit. There are two main types of merchandisers: wholesalers who buy goods in bulk from manufacturers and sell to retailers, and retailers who sell directly to end users. Merchandising involves two main activities - buying and selling goods. Transactions are recorded from the point of view of the buyer and seller through documents like purchase orders, receiving reports, and debit memos. Common accounts used include Purchases, Purchase Returns and Allowances, Purchase Discounts, and Freight-In. A business can use either a periodic or perpetual inventory system to record inventory transactions.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 74

    GSNIDNCAHMRE

    MERCHANDISING
    INTRODUCTION
    TO
    MERCHANDISING
    A business engaged in the
    buying and selling of
    merchandise or goods is
    called a TRADING OR
    MERCHANDISING FIRM.
    A merchandising type of
    business generates income
    by buying and selling
    goods at a profit.
    MERCHANDISING
    AND
    MANUFACTURING
    A manufacturing business
    buys a raw materials and
    process them to become
    finished goods for sale.
    The merchandiser
    purchases these goods
    directly from the
    manufacturer.
    Type of
    Merchandisers
    1. Wholesaler – one who
    buys in bulk or volume
    directly from a manufacturer
    and sells the goods to a
    retailer.
    2. Retailer – one who
    sells products to end
    users.
    Merchandising
    Operations
    Two main activities are involved in a
    merchandising business, namely buying
    and selling. Therefore, there are two
    POINTS OF VIEW considered in
    recording the business transactions of a
    merchandising business. These are the
    point of view of the buyer and the seller.
    Buyer’s Point
    of View
    A buyer is the one who purchases goods.
    Merchandise Inventory are goods or
    commodities purchased by the company
    for sale normally at a profit. Certain
    documents are prepared by the buyer to
    complete a purchase transaction.
    1.Purchase
    Order
    1. Purchase Order – a document sent by
    the buyer to the seller ordering certain
    goods where the date, quantity, description
    of goods and the total amount of the order
    is indicated. This authorizes the seller to
    deliver the goods to the buyer under the
    agreed specifications, terms and conditions.
    2.Receiving
    report
    2. Receiving report – a form
    prepared by the buyer’s
    receiving personnel stating the
    quantity and condition of the
    goods delivered by the seller.
    3.Debit
    memorandum
    3. Debit memorandum – a written notice
    from the buyer informing the seller that the
    buyer will debit the account or decrease the
    amount owed to the seller for returned
    goods and allowances requested due to
    defect or wrong specifications.
    Account
    Titles Used
    1. Purchases – the account
    used to record the cost of the
    goods or merchandise
    bought for purpose of resale.
    2. Purchase Returns and
    Allowances – the account used to
    record returns acknowledged or
    allowances granted by the
    supplier to the buyer from the
    purchase of goods.
    3. Purchase Discount – a reduction
    from the purchase price of the
    merchandise or goods bought
    granted by the supplier to the buyer
    or customer for paying within the
    discount period.
    4. Freight-in – the cost of
    transporting the merchandise or
    goods from the seller’s place to the
    buyer’s place of business. This is
    also called Transportation – in.
    ILLUSTRATIVE
    EXAMPLE
    On April 5, Cinder
    Company purchased from
    Rella Company
    merchandise for cash
    worth ₱ 150,000.
    PURCHASES ₱ 150,000
    CASH ₱ 150,000
    PURCHASED MERCHANDISE FOR CASH
    On April 10, Snow Company
    purchased merchandise from
    White Company for ₱ 300,000
    paying ₱ 50,000 and the balance
    on account. Terms: 2/10, n/30
    PURCHASES ₱ 300,000
    ACCOUNT PAYABLE – WHITE Co. ₱ 250,000
    CASH 50,000
    PURCHASED MERCHANDISE ON
    ACCOUNT. TERMS: 2/10, n/30
    NOTE: the term 2/10, n/30 mean that a
    2% discount will be given if payment of
    the balanced is made within 10 days from
    the sales invoice date but NO DISCOUNT
    will be given if payment is made beyond
    10 days. Net amount is payable within 30
    days.
    April 10 _ _ _ _ _ _ _ _ _ April 20
    2% Discount

    April 21 _ _ _ _ _ _ _ _ _ May 10
    NO DISCOUNT
    Snow Company returned
    defective merchandise to
    White Company worth ₱
    30,000.
    ACCOUNTS PAYABLE – WHITE Co. ₱ 30,000
    PURCHASED RETURNS AND ALLOWANCE ₱ 30,000
    RETURNED DEFECTIVE MERCHANDISE
    PURCHASED ON ACCOUNT
    Snow Company made a
    partial payment of ₱
    20,000 to White
    Company.
    ACCOUNTS PAYABLE – WHITE Co. ₱ 20,000
    CASH ₱ 20,000
    PARTIAL PAYMENT
    Cinder Company returned
    defective merchandise to
    Rella Company worth ₱
    20,000 to White Company.
    CASH ₱ 20,000
    PURCHASED RETURNED AND ALLOWANCES ₱ 20,000
    RECEIVED CASH REFUND FOR RETURNED
    MERCHANDISE
    Paid ₱ 5,000 for the
    transportation charges for
    merchandise bought from
    White Company.
    FREIGHT - IN ₱ 5,000
    CASH ₱ 5,000
    PAID FREIGHT – IN CHARGES FOR
    MERCHANDISE PURCHASED
    Paid account to
    White Company on
    April 20.
    ACCOUNTS PAYABLE – WHITE Co. ₱ 200,000
    PURCHASED DISCOUNT ₱ 4,000
    CASH 196,000
    PAID ACCOUNT WITHIN THE DISCOUNT
    PERIOD
    On April 15, Rumple Co.
    purchased merchandise from
    Tiltskin Co. worth ₱ 60,000
    on account. Terms: 3/10
    EOM, n/60
    PURCHASES ₱ 60,000
    ACCOUNTS PAYABLE – TILTSKIN Co. ₱ 60,000
    PURCHASED MERCHANDISE ON
    ACCOUNT TERMS: 3/10 EOM, n/60
    NOTE: the term 3/10 EOM, n/60 means
    that 3% discount will be given to the buyer
    if the buyer pays 10 days after the END OF
    THE MONTH. NO DISCOUNT will be
    given if the buyer pays after the discount
    period. Net amount is payable within 60
    days.
    April 15 _ _ _ _ _ _ _ _ _ May 10
    3% Discount

    May 11 _ _ _ _ _ _ _ _ _ June 14
    NO DISCOUNT
    On May 18, Rumple
    Co. paid the account
    to Tiltskin Co.
    ACCOUNTS PAYABLE – TILTSKIN Co. ₱ 60,000
    CASH ₱ 60,000
    PAID ACCOUNT WITH TILTSKIN Co.
    INVENTORY
    SYSTEMS IN A
    MERCHANDISING
    BUSINESS
    There are two alternative
    systems which can be used in
    recording transactions related to
    a company’s merchandise
    inventory.
    The PERIODIC
    SYSTEM and the
    PERPETUAL
    SYSTEM.

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