財務(wù)會計 雙語教學(xué) Financial Accounting Weygandt Kieso Kimmel ch06.ppt

1、John Wiley & Sons, Inc.,Financial Accounting 5e,Prepared by Kurt M. Hull, MBA CPA California State University, Los Angeles,Weygandt, Kieso, & Kimmel,CHAPTER 6 INVENTORIES,STUDY OBJECTIVES After studying this chapter, you should understand:,CLASSIFYING INVENTORY,INVENTORY,RAW MATERIALS,WORK IN PROCES

2、S,FINISHED GOODS,For manufacturers, inventory has three distinct categories.,STUDY OBJECTIVE 1 DETERMINING INVENTORY QUANTITIES,At the balance sheet date, companies must determine how many units are on hand, and value those units. Two steps are required to achieve this:,1. Take a physical inventory

3、count,2. Determine ownership of goods,INTERNAL CONTROLS FOR PHYSICAL INVENTORY,Proper internal control over inventory can be achieved by the implementing the following procedures:,Seller,Buyer,Public Carrier Co.,FOB Shipping Point FOB Destination Point,Public Carrier Co.,Buyer,Seller,Ownership passe

4、s to the buyer here,Ownership passes to the buyer here,DETERMINING OWNERSHIP OF GOODS IN TRANSIT,DETERMINING OWNERSHIP OF CONSIGNED GOODS,A consignment agreement transfers goods from a consignor to a consignee, who agrees to sell the goods.,Consignor,Consignee,Customer,Consignee remits proceeds (les

5、s fee) to consignor when inventory is sold. Inventory on consignment is included in the consignors inventory until sold.,Sale,Pool of Costs,Cost of Goods Available for Sale,Beginning inventory,$ 20,000,Cost of goods purchased,100,000,Cost of goods available for sale,$120,000,Step 1,Step 2,Ending Inv

6、entory,Cost of Goods Sold,Unit,Total,Cost of goods available for sale,$120,000,Units,Cost,Cost,Less: Ending inventory,15,000,5,000,$ 3.00,$15,000,Cost of goods sold,$105,000,STUDY OBJECTIVE 2 INVENTORY COSTING PERIODIC SYSTEM,1,SPECIFIC IDENTIFICATION,Inventory Purchases,Item 1 $700,Item #2 $750,Ite

7、m #3 $800,SOLD,SOLD,Cost of Goods Sold $1,500,Tracks actual flow of goods. Each item marked with its unit cost.,ASSUMED COST FLOW METHODS,These methods assume cost flows that may be unrelated to the actual physical flow of goods.,FIFO,LIFO,AVERAGE COST,These cost flow assumptions do not have to be c

8、onsistent with the actual flow of goods.,Earliest goods purchased are the first to be sold. Cost of earliest goods purchased are the first to be recognized as cost of goods sold. Ending inventory consists of items purchased late in the year.,FIFO FIRST-IN, FIRST-OUT,FIFO ASSUMPTIONS,Step 1,Step 2,En

9、ding Inventory,Cost of Goods Sold,Unit,Total,Date,Units,Cost,Cost,11/27,400,$ 13,$ 5,200,Cost of goods available for sale,$ 12,000,08/24,50,12,600,Less: Ending inventory,5,800,450,$5,800,Cost of goods sold,$6,200,ALLOCATION OF COSTS FIFO METHOD,12,000,The accuracy of the cost of goods sold can be ve

10、rified by recognizing that the first units acquired are the first units sold.,Unit,Total,Date,Units,Cost,Cost,01/01,X,=,04/15,X,=,08/24,X,=,Total,100 $ 10 $ 1,000 200 11 2,200 250 12 3,000 550 $ 6,200,COGS PROOF FIFO METHOD,REVIEW QUESTION FIFO METHOD,In a period of rising prices, will FIFO will pro

11、duce a higher or lower net income than LIFO? Why?,Answer: FIFO will produce a higher net income when prices are rising because cost of goods sold is made up of items purchased early in the year at lower prices.,Latest goods purchased are the first to be sold. Cost of latest goods purchased are the f

12、irst to be recognized as cost of goods sold. Ending inventory consists of items purchased early in the year.,LIFO LAST-IN, FIRST-OUT,LIFO ASSUMPTIONS,Step 1,Step 2,Ending Inventory,Cost of Goods Sold,Unit,Total,Date,Units,Cost,Cost,01/01,100,$ 10,$ 1,000,04/15,200,11,2,200,Cost of goods available fo

13、r sale,$ 12,000,08/24,150,12,1,800,Less: Ending inventory,5,000,450,$5,000,Cost of goods sold,$7,000,ALLOCATION OF COSTS LIFO METHOD,$12,000,The cost of the last goods in are the first to be assigned to cost of goods sold. Under a periodic inventory system, all goods purchased during the period are

14、assumed to be available for the first sale, regardless of the date of purchase.,400 $ 13 $ 5,200 150 12 1,800 550 $ 7,000,COGS PROOF LIFO METHOD,REVIEW QUESTION LIFO METHOD,In a period of rising prices, will LIFO will produce a higher or lower ending inventory than FIFO? Why?,Answer: LIFO will produ

15、ce a lower ending inventory than FIFO when prices are rising because ending inventory is made up of items purchased early in the year at lower prices.,Goods available for sale are homogeneous. Cost of goods available for sale is allocated on the basis of the weighted average unit cost incurred. The

16、weighted average unit cost is applied to the units on hand to determine the cost of ending inventory.,AVERAGE COST,AVERAGE COST ASSUMPTIONS,Step 1,Step 2,Ending Inventory,Cost of Goods Sold,$ 12,000,1,000,=,$12.00,Unit,Total,Cost of goods available for sale,$ 12,000,Units,Cost,Cost,Less: Ending inve

17、ntory,5,400,450,x,$ 12.00,=,Cost of goods sold,$ 12,000 $ 5,400 $ 6,600,ALLOCATION OF COSTS AVERAGE COST,Cost of goods sold 4,000 (200 x $20) 4,800 (200 x $24),Kralik Company purchases: January 10200 units at $20 each December 31200 units at $24 each Kralik Company sold 200 units at $30 each Cost of

18、 goods sold and gross profit under FIFO and LIFO are:,STUDY OBJECTIVE 3 FINANCIAL STATEMENT & EFFECTS,A company needs to use its chosen cost flow method consistently from one period to another. Consistent application makes more comparable financial statements. Changes in cost flow method should be d

19、isclosed in the financial statements.,USE COST FLOW METHODS CONSISTENTLY,The inventory is written down to its market value.,STUDY OBJECTIVE 4 LOWER OF COST OR MARKET,Market Value,Cost,IF,When using LCM: Market value = Replacement cost,Lower of,Cost or,Cost,Market,Market,Television sets,Consoles,$ 60

20、,000,$ 55,000,$ 55,000,Portables,45,000,52,000,45,000,Total,105,000,107,000,Video equipment,Recorders,48,000,45,000,45,000,Movies,15,000,14,000,14,000,Total,63,000,59,000,Total inventory,$ 168,000,$ 166,000,$ 159,000,VALUING INVENTORY AT LOWER OF COST OR MARKET,Illustration 6-18,Inventory errors thu

21、s affect both COGS and NET INCOME.,STUDY OBJECTIVE 5 INVENTORY ERRORS,Ending inventory Period 1,Beginning inventory Period 2,=,+,=,Beginning Inventory,Cost of Goods Purchased,Ending Inventory,Cost of Goods Sold,_,To find the effect of an inventory error using this formula: Input INCORRECT DATA Input

22、 CORRECT DATA Compare results.,FORMULA FOR COST OF GOODS SOLD,An error in ending inventory in the current period will have the reverse effect on net income in the next period.,INCOME STATEMENT EFFECTS OF INVENTORY ERRORS,Overstated,Understated,Ending inventory overstated,Understated,Overstated,Endin

23、g inventory understated,Understated,Overstated,Beginning inventory understated,Overstated,Understated,Beginning inventory understated,NET INCOME,COGS,INVENTORY ERROR,INCOME STATEMENT EFFECTS OF INVENTORY ERRORS,Understated,None,Understated,Understated,Overstated,None,Overstated,Overstated,Stockholde

24、rs Equity,Liabilities,Assets,Ending Inventory Error,The effect of ending-inventory errors on the balance sheet can be determined by using the accounting equation:,ASSETS = LIABILITIES + STOCKHOLDERS EQUITY,Inventory is classified as a current asset in the balance sheet. COGS is subtracted from sales

25、 in the income statement.,INVENTORY DISCLOSURES,Notes to financial statements should include: Major inventory classes (if not on balance sheet) Basis of accounting (Cost or LCM) Costing Method (FIFO, LIFO, AVERAGE COST),STUDY OBJECTIVE 6 INVENTORY TURNOVER,Measures the number of times on average the

26、 inventory is sold during a period.,COGS,AVERAGE INVENTORY,=,INVENTORY TURNOVER,$198,747,($24,401 +26,612) / 2,=,7.79 times,Average days to sell,=,365 / 7.79 = 47 days,The product data shown below for Bow Valley Electronics will be used to explain perpetual inventory costing using three assumed cost

27、 flow methods:,Bow Valley Electronics,Z202 Astro Condensers,Unit,Total,Date,Explanation,Units,Cost,Cost,01/01,Beginning inventory,100,$10,$ 1,000,04/15,Purchase,200,11,2,200,08/24,Purchase,300,12,3,600,11/27,Purchase,400,13,5,200,Total,$ 12,000,APPENDIX 6A COST FLOWSPERPETUAL INVENTORY,FIFO,AVERAGE

28、COST,LIFO,Under FIFO, the cost of the earliest goods on hand prior to each sale is charged to cost of goods sold. Therefore, the cost of goods sold on September 10 consists of the units on hand January 1 and the units purchased April 15 and August 24.,Date,Purchases,Sales,Balance,January 1,(100 $10)

29、 $1,000,April 15,(200 $11) $2,200,(100 $10),(200 $11) $3,200,August 24,(300 $12) $3,600,(100 $10),(200 $11),(300 $12) $6,800,September 10,(100 $10),(200 $11) $6,200,(250 $12),(50 $12) $600,November 27,(400 $13) $5,200,(50 $12),(400 $13) $5,800,APPENDIX 6A PERPETUAL INVENTORY FIFO,Under the LIFO meth

30、od using a perpetual system, the cost of the most recent purchase prior to sale is allocated to the units sold. The cost of the goods sold on September 10 consists entirely of goods from the August 24 and April 15 purchases and 50 of the units in beginning inventory.,Date,Purchases,Sales,Balance,Jan

31、uary 1,(100 $10) $1,000,April 15,(200 $11) $2,200,(100 $10),(200 $11) $3,200,August 24,(300 $12) $3,600,(100 $10),(200 $11),(300 $12) $6,800,September 10,(300 $20),(200 $11) $6,300,(50 $10),(50 $10) $500,November 27,(400 $13) $5,200,(50 $10),(400 $13) $5,700,APPENDIX 6A PERPETUAL INVENTORY LIFO,The

32、average cost method in a perpetual inventory system is called the moving average method. Under this method a new average is computed after each purchase. The average cost is computed by dividing the cost of goods available for sale by the units on hand. The average cost is then applied to:,APPENDIX

33、6A PERPETUAL INVENTORY AVG COST,Average Cost x Units Sold = COGS,Average Cost x Remaining Units = ENDING INVENTORY,A new average is computed each time a purchase is made. On April 15, after 200 units are purchased for $2,200, a total of 300 units costing $3,200 ($1,000 + $2,200) are on hand. The ave

34、rage cost is $10.667 ($3,200/300).,Date,Purchases,Sales,Balance,January 1,(100 $10),$1,000,April 15,(200 $11) $2,200,(300 10.667),$3,200,August 24,(300 $12) $3,600,(600 11.333),$6,800,September 10,(550 11,333),$6,233,(50 $11.333),$567,November 27,(400 $13) $5,200,(450 12.816),$5,767,APPENDIX 6A PERP

35、ETUAL INVENTORY AVG COST,The gross profit method estimates the cost of ending inventory by applying a gross profit rate to net sales. It is used in preparing monthly financial statements under a periodic system. It should NOT be used in preparing the companys financial statements at year-end. The gross profit rate is assumed to remain constant from one year to the next.,APPENDIX 6B INVENTORY ESTIMATION GROSS PROFIT METHOD,Cost of Goods Available for Sale,APPENDIX 6B GRO