6
1
1

After studying this chapter, you should be able to:
1.
Distinguish between the activities and financial statements of service and merchandising businesses.
2.
Describe and illustrate the financial statements of a merchandising business.
2
2

3.
After studying this chapter, you should be able to:
Describe and illustrate the accounting for merchandise transactions including:
 sale of merchandise
 purchase of merchandise
 transportation costs, sales taxes, trade discounts
 dual nature of merchandising transactions.
4.
Describe the adjusting and closing process for a merchandising business.
3
3

6-1
4
4

Service Business
Fees earned
Operating expenses
Net income
$XXX
–XXX
$XXX
5
6-1
5

Merchandising Business
Sales
Cost of Merchandise Sold
Gross Profit
Operating Expenses
Net Income
$XXX
–XXX
$XXX
–XXX
$XXX
6
6-1
6

.
7
6-1
7

The cost of merchandise sold is subtracted from sales to arrive at gross profit. This amount is called gross profit because it is the profit before deducting the operating expenses .
6-1
8
8

6-1
9
9

Example Exercise 6-1
On August 25, Gallatin Repair Service extended an offer of
During the current year, merchandise is sold for
Gallatin Repair Service was offered $160,000 for the land by a
Follow My Example 6-1
$137,000. Under the cost concept, the land should be recorded at the cost to Gallatin Repair Service.
For Practice: PE 6-1A, PE 6-1B 31
10

6-1
11
11
11

6-2
12
12

Multiple-Step Income Statement
6-2
13
13

14
6-2
14

15
6-2
15

6-2
16
16

6-2
17
17

Multiple-Step Income Statement
SolusiNet
Income Statement
For the Year Ended December 31, 2009 (in Rp000)
Revenue from sales:
Sales
Less: Sales returns and allowances Rp 6,140
Rp720,185
Sales discounts
Net sales
Cost of merchandise sold
5,790 11,930
Rp708,255
525,305
Gross profit Rp182,950
6-2
(Continued)
18

(In Rp000)
Operating expenses:
Selling expenses:
Sales salaries expense
Advertising expense
Depr. Expense –store equipment
Delivery Expense
Miscellaneous selling expense
Total selling expenses
Administrative expenses:
Office salaries expense
Rent expense
Depr. expense –office equipment
Insurance expense
Office supplies expense
Misc. administrative expense
Total admin. expenses
Total operating expenses
Income from operations (Continued)
Rp53,430
10,860
3,100
2,800
630
Rp21,020
8,100
2,490
1,910
610
760
Rp 70,820
34,890
19
105,710
19

(In Rp000)
Other income and expenses:
Rent revenue
Interest expense
Net income
Rp 600
(2,440) (1,840)
Rp75,400
6-2
20
(Concluded)

6-2
21
21

22
6-2
22

23
6-2
23

Cost of Merchandise
Sold
Merchandise Inventory, January 1,2009............
Purchases
Less: Purchases returns and allowances ......... Rp9,100
Rp521,980
Rp 59,700
Purchase discounts ................................ 2,525 11,625
Net purchases ................................................... Rp510,355
Add transportation in.......................................... 17,400
Cost of merchandise purchased .................. 527,755
Merchandise available for sale .......................... Rp587,455
Less merchandise inventory, December 31, 2009 62,150
Cost of merchandise sold .................................. Rp525,305
6-2
24
24

Single-Step Income Statement
An alternative form of income statement is the single-step income statement. As shown in the next slide, the income statement for SolusiNet deducts the total of all expenses in one step from the total of all revenues.
6-2
25
25

Exhibit 3: Single-Step Income Statement
SolusiNet
Income Statement
For the Year Ended December 31, 2009 (in Rp000)
Revenues:
Net sales
Rent revenue
Total revenues
Expenses:
Cost of merchandise sold Rp525,305
Selling expenses 70,820
Administrative expenses
Interest expense
Total expenses
34,890
2,440
Net income
Rp708,255
600
Rp708,855
633,455
Rp 75,400
6-2
26

Exhibit 4: Statement of Owner’s Equity
SolusiNet
Statement of Owner’s Equity
For the Year Ended December 31, 2009 (in Rp000)
Chris Clark, capital, 1/1/09
Net income for year
Less withdrawals
Increase in owner’s equity
Chris Clark, capital, 12/31/09
Rp75,400
18,000
Rp153,800
57,400
Rp211,200
6-2
27

Exhibit 5: Report Form of Balance Sheet
SolusiNet
Balance Sheet
December 31, 2009 (in Rp000)
Assets
Current assets:
Cash
Accounts receivable
Merchandise inventory
Office supplies
Prepaid insurance
Total current assets
Rp52,950
91,080
62,150
480
2,650
Rp209,310
(Continued)
6-2
28

Exhibit 5: Report Form of Balance Sheet
Property, plant, and equip.:
Land
Store equipment
Less accumulated
Rp27,100
Rp20,000 depreciation 5,700 21,400
Rp15,570 Office equipment
Less accumulated depreciation
Total property, plant, and equipment
Total assets
4,720 10,850
52,250
Rp261,560
(In Rp000)
(Continued)
6-2
29

Exhibit 5: Report Form of Balance Sheet
Current liabilities:
Accounts payable
Liabilities
Note payable (current portion)
Salaries payable
Unearned rent
Total current liabilities
Long-term liabilities:
Note payable (final pmt. due 2017)
Rp22,420
5,000
1,140
1,800
Rp 30,360
20,000
Rp 50,360 Total liabilities
Owner’s Equity
Cinta Cita, capital
Total liabilities and owner’s equity
211,200
Rp261,560
(Concluded)
6-2
30

Example Exercise 6-2
Based upon the following data, determine the cost of merchandise sold for May. Use the format seen in
Exhibit 2.
Merchandise Inventory, May 1
Merchandise Inventory, May 31
Purchases
Purchases Returns and Allowances
Purchases Discounts
Transportation In
Rp121,200,000
142,000,000
985,000,000
23,500,000
21,000,000
11,300,000
6-2
31

Follow My Example 6-2
Merchandise Inventory, May 1
Purchases Rp985,000
Less: Purchases returns and allowances Rp23,500
Purchases discounts 21,000 44,500
Net purchases
Add transportation in
Cost of merchandise purchased
Rp940,500
11,300
Rp 121,200
Merchandise available for sale
Less merchandise inventory, May 31
Cost of merchandise sold
951,800
Rp1,073,000
142,000
Rp 931,000
6-2
32
For Practice: PE 6-2A, PE 6-2B

Describe and illustrate the accounting for merchandise transactions including: sale of merchandise; purchase of merchandise; transportation costs, sales taxes, trade discounts; dual nature of merchandise transactions.
33
6-3
33

6-3
34
Cash Sales
JOURNAL Page 25
Post
Date Description
Jan 2009 3 Cash
Sales
To record cash sales
Ref Debit
1 800 000
Credit
1 800 000
On January 3, SolusiNet sold
Rp1,800,000 of merchandise for cash.
@solusi net
34

Cash Sales (continued)
Jan 3 Cost of Merchandise Sold
Merchandise Inventory
To record the cost of merch. sold
1 200 000
1 200 000
Using a perpetual inventory, the
Rp1,200,000 cost of the inventory must be recorded.
35
6-3
35

Credit Card Sales
Jan 3 Credit Card Expense
Cash
To record service charges on credit card sales for the month
48 000
At the end of the month, Rp48,000 was sent to pay the service charge on credit card sales.
48 000
6-3
36

Sales on Account Using a Perpetual
Inventory
Jan. 12 Accounts Receivable—CV Agung Surya 510 000
Sales
Invoice No. 7172
6-3
510 000
12 Cost of Merchandise Sold
Merchandise Inventory
Cost of merchandise sold on
Invoice No. 7172.
280 000
280 000
On January 12, SolusiNet sold CV Agung Surya merchandise on account, Rp510,000. The cost of the merchandise to the seller was Rp280,000.
37

Sales Discounts
The terms for when payments for merchandise are to be made, agreed on by the buyer and the seller, are called credit terms . If buyer is allowed an amount of time to pay, it is known as the credit period .
6-3
38
38

Credit Terms
If invoice is paid within
10 days of invoice date
Rp1,470,000 paid
(Rp1,500,000 less a
2% discount)
Invoice for
Rp1,500,000
Terms:
2/10, n/30
6-3
39

Invoice for
Rp1,500,000
Terms:
2/10, n/30
If invoice is
NOT paid within 10 days of invoice date
Full amount
(Rp1,500,000) is due within 30 days of invoice date
6-3
40

Sales Discounts
Jan. 22 Cash
Sales Discounts
Accounts Receivable–Omega Tech.
Collection of Invoice No.
106-8, less 2% discount.
1 470 000
30 000
1 500 000
On January 22, SolusiNet receives the amount due, less the 2 percent discount.
6-3
41

6-3
Jan. 13 Sales Returns and Allowances
Accounts Receivable-PT Krisna
Credit Memo No. 32
225 000
225 000
13 Merchandise Inventory
Cost of Goods Sold
Cost of merchandise returned.
Credit Memo No. 32.
140 000
On January 13, issued Credit Memo 32 to PT
Krisna for merchandise returned to SolusiNet.
Selling price, Rp225,000; cost to SolusiNet,
Rp140,000.
140 000
42

Example Exercise 6-3
Journalize the following merchandise transactions: a. Sold merchandise on account, Rp7,500,000 with terms of 2/10, n/30. The cost of the merchandise sold was
Rp5,625,000.
b. Received payment less the discount.
43

Follow My Example 6-3 a.
b.
Accounts Receivable
Sales
7,500,000
Cost of Merchandise Sold 5,625,000
Merchandise Inventory
Cash
Sales Discounts
Accounts Receivable
7,350,000
150,000
7,500,000
5,625,000
7,500,000
6-3
44
For Practice: PE 6-3A, PE 6-3B

Purchase Transactions (Perpetual
Inventory)
JOURNAL
Date Description
2009
Jan. 3 Merchandise Inventory
Cash
Purchased inventory from
CV Budi.
6-3
PAGE 24
Post.
Ref.
Dr Cr.
2 510 000
2 510 000
45
On January 3, SolusiNet purchased merchandise for cash from Alden Company, Rp2,510,000.

Jan. 4 Merchandise Inventory
Accounts Payable—CV Thomas
Purchased inventory on account.
9 250 000
9 250 000
On January 4, SolusiNet purchased merchandise on account from CV Thomas,
Rp9,250,000.
6-3
46

Purchases Discounts
PT Alpha Technologies issues an invoice for
Rp3,000,000 to SolusiNet dated March 12, with terms
2/10, n/30.
6-3
47
47

SolusiNet borrows cash at an annual interest rate of 6%. Should the firm borrow cash to pay the invoice within the discount period?
YES
Discount of 2% on Rp3,000,000
Savings from borrowing
Rp60,000
Interest for 20 days at the rate of 6% on Rp2,940,000
– 9,800
Rp50,200
48
6-3
48

Purchase Transactions (Perpetual
Inventory)
6-3
Mar. 12 Merchandise Inventory
Accounts Payable— PT Alpha Tech.
Purchased inventory on account.
3 000 000
3 000 000
On March 12, SolusiNet purchased merchandise on account from PT Alpha
Technologies, Rp3,000,000.
49

6-3
Mar. 22 Accounts Payable— PT Alpha Technol.
3 000 000
Cash
Merchandise Inventory
Paid PT Alpha Technologies for March 12 purchase.
2 940 000
60 000
If payment is made by March 22, SolusiNet records the discount as a reduction in cost. Notice that Merchandise Inventory is credited because
NetSolutions maintains a perpetual inventory.
50

Apr. 11 Accounts Payable— PT Alpha Technol.
3 000 000
Cash
Paid PT Alpha Technologies for March 12 purchase.
3 000 000
If SolusiNet does not pay the invoice until
April 11, it would pay the full amount.
6-3
51

Purchases Return
A purchases return involves actually returning merchandise that is damaged or does not meet the specifications of the order.
6-3
52
52

Purchases Allowance
When the defective or incorrect merchandise is kept by the buyer and the vendor makes a price adjustment, this is a purchases allowance .
6-3
53
53

@solusi net
SolusiNet receives the delivery from PT Malang Komputer and determines that Rp900,000 of the items are not the merchandise ordered. Debit memorandum #18
(also called a debit memo ) is issued to Maxim Systems.
6-3
54
54

Mar. 7 Accounts Payable— PT Malang Komp.
Merchandise Inventory
Debit Memo No. 18
900 000
900 000
On March 7, SolusiNet records the return of the merchandise indicated in Debit
Memorandum No. 18.
6-3
55

6-3
On May 2, SolusiNet purchased
Rp5,000,000 of merchandise from Delta
Data Link, subject to terms 2/10, n/30.
May 2 Merchandise Inventory
Accounts Payable—Delta Data
Purchased merchandise.
5 000 000
5 000 000
56

On May 4, SolusiNet returns
Rp3,000,000 of the merchandise.
4 Accounts Payable—Delta Data Link
Merchandise Inventory
Returned portion of the merchandise purchased.
3 000 000
3 000 000
6-3
57

6-3
On May 12, SolusiNet pays the amount due,
Rp1,960,000 [Rp2,000,000 – (Rp5,000,000 –
Rp3,000,000) x 2%)].
12 Accounts Payable—Delta Data Links
Cash
Merchandise Inventory
Paid invoice [(Rp5,000,000 –
Rp3,000,000) x 2% = Rp40,000;
Rp2,000,000 – Rp40,000 =Rp1,960,000]
2 000 000
1 960 000
40 000
58

6-3
59
Example Exercise 6-4
Ramli Company purchased merchandise on account from a supplier for Rp11,500,000, terms 2/10, n/30. Rofles Company returned Rp3,000,000 of the merchandise and received full credit.
a.
If Rofles Company pays the invoice within the discount period, what is the amount of cash required for the payment?
b.
Under a perpetual inventory system, what account is credited by Rofles Company to record the return?

Follow My Example 6-4 a.
Rp8,330,000. Purchase of Rp11,500,000 less the return of Rp3,000,000 less the discount of
Rp170,000 [(Rp11,500,000 – Rp3,000,000) x
2%].
b.
Merchandise Inventory.
6-3
60
For Practice: PE 6-4A, PE 6-4B

Transportation Costs
If ownership of the merchandise passes to the buyer when the seller delivers the merchandise to the freight carrier, it is said to be FOB
(free on board) shipping point .
6-3
61
61

June 10 Merchandise Inventory
Accounts Payable—Magna Data
Purchased merchandise, terms FOB shipping point.
10 Merchandise Inventory
Cash
Paid shipping cost .
900 000
900 000
6-3
50 000
50 000
On June 10, SolusiNet buys merchandise from Magna
Data on account, Rp900,000, terms FOB shipping point and pays the transportation cost of Rp50,000.
62

Transportation Costs
If ownership of the merchandise passes to the buyer when the buyer receives the merchandise, the terms are said to be FOB
(free on board) destination .
6-3
63
63

FOB Destination
@solusi net
On June 15, SolusiNet sells merchandise to PT Kiki on account,
Rp700,000, terms FOB destination.
The cost of the merchandise sold is
Rp480,000.
6-3
64
64

June 15 Accounts Receivable—PT Kiki
Sales
Sold merchandise, terms
FOB destination.
15 Cost of Merchandise Sold
Merchandise Inventory
Record cost of merchandise sold to PT Kiki
700 000
700 000
480 000
480 000
6-3
65

June 15 Delivery Expense
Cash
Paid shipping cost on merchandise sold.
40 000
40 000
On June 15, SolusiNet pays the transportation cost of Rp40,000.
6-3
66

FOB Shipping Point
On June 20, SolusiNet sells merchandise to CV Permadi on account, Rp800,000, terms FOB shipping point. The cost of the merchandise sold is Rp360,000.
6-3
67
67

June 20 Accounts Receivable—CV Permadi
Sales
Sold merchandise, terms
FOB shipping point.
20 Cost of Merchandise Sold
Merchandise Inventory
Record cost of merchandise sold to CV Permadi
800 000
800 000
360 000
360 000
6-3
68

June 20 Accounts Receivable—CV Permadi
Cash
Prepaid shipping cost on merchandise sold.
45 000
45 000
SolusiNet pays the transportation cost of Rp45,000 and adds it to the invoice.
6-3
69

Example Exercise 6-5 a.
b.
Determine the amount to be paid in full settlement of each of invoices (a) and (b), assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.
Transportation Returns and
Merchandise Paid by Seller Transportation Terms Allowances
Rp4,500,000 Rp200,000 FOB shipping point, Rp800,000
1/10, n/30
Rp5,000,000 60,000 FOB destination,
2/10, n/30
Rp2,500,000
6-3
70

Follow My Example 6-5 a.
Rp3,863,000. Purchase of Rp4,500,000 less return of Rp800,000 less the discount of
Rp37,000 [(Rp4,500,000 – Rp800,000) x 1%] plus Rp200,000 of shipping.
b.
Rp2,450,000. Purchase of Rp5,000,000 less return of Rp2,500,000 less the discount of
Rp50,000 [(Rp5,000,000 – Rp2,500,000) x 2%].
For Practice: PE 6-5A, PE 6-5B
6-3
71

6-3
72

Sales Taxes
Aug. 12 Accounts Receivable—CV Lemon
Sales
Sales Taxes Payable
Invoice No. 339
106 000
100 000
6 000
6-3
73
On August 12, merchandise is sold on account to Lemon Company,
Rp100,000. The state has a 6% sales tax.

6-3
74
2 900 000
2 900 000
Sept. 15 Sales Tax Payable
Cash
Payment for sales taxes collected during August.
On September 15, the seller sends in a payment of Rp2,900,000 to the taxing unit for the August taxes collected.

Trade Discounts
When wholesalers offer special discounts to certain classes of buyers that order large quantities, these discounts are called trade discounts .
6-3
75
75

Dual Nature of Merchandise
Transactions
Each merchandising transaction affects a buyer and a seller. In the following illustrations, we show how the same transactions would be recorded by both the seller and the buyer.
July 1. CV Santi sold merchandise on account to CV Budiman, Rp7,500,000, terms
FOB shipping point, n/45. The cost of the merchandise sold was Rp4,500,000.
76
6-3
76

6-3
CV Santi (Seller)
Accounts Receivable—CV Budiman 7,500,000
Sales 7,500,000
Cost of Merchandise Sold
Merchandise Inventory
4,500,000
4,500,000
CV Budiman (Buyer)
Merchandise Inventory.
Accounts Payable—CV Santi
7,500,000
7,500,000
77

July 2 CV Budiman paid transportation charges of Rp150,000 on July 1 purchase from CV Santi.
6-3
78
78

No entry.
CV Santi (Seller)
CV Budiman (Buyer)
Merchandise Inventory
Cash
150,000
150,000
6-3
79

July 5 CV Santi sold merchandise on account to CV Budiman,
Rp5,000,000, terms FOB destination, n/30. The cost of the merchandise sold was
Rp3,500,000.
80
6-3
80

6-3
CV Santi (Seller)
Accounts Receivable—CV Budiman 5,000,000
Sales 5,000,000
Cost of Merchandise Sold
Merchandise Inventory
3,500,000
3,500,000
CV Budiman (Buyer)
Merchandise Inventory.
Accounts Payable—CV Santi
5,000,000
5,000,000
81

July 7. CV Santi paid transportation costs of Rp250,000 for delivery of merchandise sold to CV
Budiman on July 5.
6-3
82
82

CV Santi (Seller)
Delivery Expense
Cash
250,000
250,000
6-3
83
No entry.
CV Budiman(Buyer)

July 13. CV Santi issued CV Budiman a credit memorandum for
Rp1,000,000 of merchandise returned from a July 5 purchase on account. The cost of the merchandise was Rp700,000.
84
6-3
84

6-3
CV Santi (Seller)
Sales Returns and Allowances
Accounts Receivable—CV Budiman
1,000,000
1,000,000
Merchandise Inventory
Cost of Merchandise Sold
700,000
700,000
CV Budiman (Buyer)
Accounts Payable—CV Santi
Merchandise Inventory
1,000,000
1,000,000
85

July 15. CV Santi received payment from CV Budiman for purchase of July 5.
86
6-3
86

6-3
CV Santi (Seller)
Cash
Accounts Receivable—CV Budiman
4,000,000
4,000,000
87
CV Budiman (Buyer)
Accounts Payable—CV Santi
Cash
4,000,000
4,000,000

July 18. CV Santi sold merchandise on account to CV Budiman,
Rp12,000,000, terms FOB shipping point, 2/10, n/eom.
Santi prepaid transportation costs of Rp500,000, which were added to the invoice. The cost of the merchandise sold was
Rp7,200,000.
88
6-3
88

6-3
CV Santi (Seller)
Accounts Receivable—CV Budiman
Sales
Accounts Receivable—CV Budiman
Cash
Cost of Merchandise Sold
Merchandise Inventory
12,000,000
12,000,000
500,000
500,000
7,200,000
7,200,000
CV Budiman (Buyer)
Merchandise Inventory
Accounts Payable—CV Santi
12,500,000
12,500,000
89

July 28. CV Santi received payment from CV
Budiman for purchase of July 18, less discount (2% x Rp12,000,000).
6-3
90
90

6-3
CV Santi (Seller)
Cash
Sales Discounts
Accounts Receivable—CV Budiman
12,260,000
240,000
12,500,000
91
CV Budiman (Buyer)
Accounts Payable—CV Santi
Merchandise Inventory
Cash
12,500,000
240,000
12,260,000

Example Exercise 6-6
Santi Co. sold merchandise to Butet Co. on account,
Rp11,500,000, terms 2/15, n/30. The cost of the merchandise sold is Rp6,900,000. Santi Co. issued a credit memorandum for Rp900,000 for merchandise returned and later received the amount due within the discount period.
The cost of the merchandise returned was Rp540,000.
Journalize Santi Co.’s and Butet Co.’s entries for the receipt of the check for the amount due from Butet Co.
92

Follow My Example 6-6
Santi Company Journal Entries:
Cash (Rp11,500,000 – Rp900,000 – Rp212,000) 10,388,000
Sales Discounts [(Rp11,500,000 – Rp900,000) x 2%] 212,000
Accounts Receivable—Butet Co.
(Rp11,500,000 – Rp900,000) 10,600,000
Butet Company Journal Entries:
Accounts Payable—Santi Co.
(Rp11,500,000 –Rp900,000)
Merchandise Inventory [(Rp11,500,000 –
Rp900,000)x 2%]
Cash (Rp11,500,000 – Rp900,000
– Rp212,000)
10,600,000
212,000
10,388,000
6-3
93
For Practice: PE 6-6A, PE 6-6B

94
6-4
94

Inventory Shrinkage
6-4
Merchandising businesses may experience some loss of inventory due to shoplifting, employee theft, or errors in recording or counting inventory. If the balance of the
Merchandise Inventory account is larger than the total amount of merchandise count, the difference is often called inventory shrinkage or inventory shortage .
95
95

@solusi net
SolusiNet inventory records indicate that Rp63,950,000 of merchandise should be available for sale on December
31, 2009. The physical count reveals that only Rp62,150,000 is actually available.
96
6-4
96

Adjusting Entry
Dec. 31 Cost of Merchandise Sold
Merchandise Inventory
Inventory shrinkage
(Rp63,950,000 – Rp62,150,000).
1 800 000
1 800 000
Inventory records Rp63,950,000
Inventory count 62,150,000
Inventory shortage Rp 1,800,000
6-4
97

Step 1: Closing Entries
Close the temporary accounts with credit balances to Income Summary .
Date Item
Closing Entries
2009
Dec. 31 Sales
Rent Revenue
Income Summary
PR Debit Credit
6-4
410 720 185 000
610 600 000
312 720 785 000
98

Step 2: Closing Entries
.
99

Step 2: Closing Entries
31 Income Summary 312 645 385 000
Sales Returns and Allow.
411
Sales Discounts 412
Cost of Merchandise Sold 510
Sales Salaries Expense 520
Advertising Expense 521
Depr. Exp.—Store Equip. 522
Delivery Expense 523
Misc. Selling Expense 529
Office Salaries Expense 530
Rent Expense 531
Depr. Exp.—Office Equip. 532
Insurance Expense 533
Office Supplies Expense 534
Misc. Administrative Exp. 539
Interest Expense 710
6 140 000
5 790 000
525 305 000
53 430 000
10 860 000
3 100 000
2 800 000
630 000
21 020 000
8 100 000
2 490 000
1 910 000
610 000
760 000
2 440 000
100
100
100

Step 3: Closing Entries
Close Income Summary (the balance represents a Rp75,400,000 profit for SolusiNet in 2009) to
Cinta Cita, Capital .
31 Income Summary
Cinta Cita, Capital
312 75 400 000
310 75 400 000
6-4
101
101
101

6-4
102
Step 4: Closing Entries
Close Cinta Cita, Drawing to Cinta Cita,
Capital .
31 Cinta Cita, Capital
Cinta Cita, Drawing
310 18 000 000
311 18 000 000
102
102

Example Exercise 6-7
Parulian Company’s perpetual inventory records indicate that
Rp382,800,000 of merchandise should be on hand on March
31, 2008. The physical inventory indicates that Rp371,250,000 of merchandise is actually on hand. Journalize the adjusting entry for the inventory shrinkage for Parulian Company for the year ended March 31, 2008.
Follow My Example 6-7
Mar. 31 Cost of Merchandise Sold
(Rp382,800,000 –(Rp371,250,000) 11,550,000
Merchandise Inventory 11,550,000
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For Practice: PE 6-7A, PE 6-7B
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Financial Analysis
The ratio of net sales to assets measures how effectively a business is using its assets to generate sales.
Ratio of Net
Sales to Assets =
Net sales
Average total assets
104
6-4
104

Ratio of Net Sales to Assets
Total revenues (net sales)
Total assets:
Beginning of year
End of year
Average Total asset
Ratio of net sales to assets
PT Hero
Supermarket
Rp5,147,229
PT Matahari
Prima Putra
Rp9,768,075
1,615,240
1,753,298
1,684,269
3.06
6,048,441
8,403,470
7,225,956
1.35
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6-4
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Interpretation
Based on these ratios, Sears appears better than J. C.
Penney in utilizing its assets to generate sales.
6-4
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