Merchandising Operations and the Accounting Cycle - Pearson
Merchandising Operations and the Accounting Cycle - Pearson
Merchandising Operations and the Accounting Cycle - Pearson
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EXHIBIT 5-3<br />
Business Invoice<br />
JVC<br />
SALES ORDER NO.<br />
N O DE COMMANDE<br />
CUSTOMER ORDER NO.<br />
N O DE COMMANDE CLIENT<br />
SPECIAL INSTRUCTIONS<br />
INSTRUCTIONS SPÉCIALES<br />
QTY.ORDERED<br />
QTÉ COMMANDÉE<br />
TRANS CODE<br />
CODE TRANS<br />
10<br />
1<br />
SALESMAN NO.<br />
N O DU VENDEUR<br />
PST NO.<br />
TVP N O<br />
MODEL / PART NUMBER<br />
MODÈLE N O / NUMÉRO DE L'ARTICLE<br />
CASH DISCOUNT<br />
ESCOMPTE AU COMPTANT<br />
JVC CANADA INC.<br />
21 FINCHDENE SQUARE, SCARBOROUGH, ONTARIO M1X 1A7<br />
PHONE: (416) 293-1311 FAX: (416) 293-8208<br />
DATE SHIPPED<br />
DATE D'EXPEDITION<br />
DESCRIPTION<br />
IF PAID BY<br />
SI PAYÉ PAR<br />
WAREHOUSE<br />
ENTREPÔT<br />
GST REG. NO.<br />
TPS REG. NO INVOICE / FACTURE<br />
DEPT. NO.<br />
N O DU DEPT.<br />
21.21 26/06/02<br />
NOTE:<br />
NO RETURNS WILL BE ACCEPTED WITHOUT PRIOR WRITTEN AUTHORIZATION BY JVC.<br />
ALL OVERDUE ACCOUNTS ARE SUBJECT TO 1-1/2% INTEREST CHARGE PER MONTH.<br />
CLAIMS FOR DAMAGES AND/OR SHORTAGES MUST BE MADE IN WRITING DIRECTLY WITH JVC.<br />
NOTE:<br />
AUCUN RETOUR ACCEPTÉ SANS AUTORISATION ÉCRITE PRÉALABLE PAR JVC.<br />
TOUT COMPTE EN SOUFFRANCE EST PASSIBLE D'UN INTÉRET DE 1-1/2% PAR MOIS.<br />
LES RÉCLAMATIONS EN RAISON DE DOMMAGES ET (OU) D'INSUFFISANCE DOIVENT ÉTRE ADRESSÉES<br />
EN ÉCRIVANT DIRECTEMENT AUPRÈS DE JVC.<br />
SHIPPED VIA<br />
EXPÉDIER PAR<br />
QTY. SHIPPED<br />
QTÉ EXPÉDIÉE<br />
CUSTOMER COPY COPIE DU CLIENT<br />
CUSTOMER NO.<br />
N O DU CLIENT<br />
PAYMENT TERMS<br />
CONDITIONS DE PAIEMENT<br />
QTY. B/O<br />
QTÉ VEN.<br />
UNIT PRICE<br />
PRIX UNITAIRE<br />
SHIPPING CHARGES / FRAIS D'EXPÉDITION<br />
OTHER CHARGES / AUTRES FRAIS<br />
GST / TPS<br />
GST / TPS ITC<br />
PST / TVP<br />
INVOICE DATE<br />
DATE DE FACTURE<br />
DISCOUNT<br />
ESCOMPTE<br />
G.S.T. REGISTRATION<br />
NO. R102746971<br />
4<br />
INVOICE NO.<br />
N O FACTURE<br />
40191-00 B 205 27/05/02 MAIN 2501 27/05/02 4104798-A<br />
2<br />
INVOICE TO:<br />
FACTURE À: AUSTIN SOUND CENTRE INC.<br />
299 PRINCESS ST.<br />
3<br />
KINGSTON, ON<br />
SHIP TO:<br />
EXPÉDIER À: AUSTIN SOUND CENTRE INC.<br />
299 PRINCESS ST.<br />
3<br />
KINGSTON, ON<br />
K7L 1B4<br />
K7L 1B4<br />
10542 R105794761 3% 15, NET 30 DAYS<br />
FREIGHT EXPENSE<br />
FRAIS DE TRANSPORT<br />
003 NIL<br />
5<br />
1 LA100<br />
1 QLA200<br />
CD PLAYER<br />
CD PLAYER<br />
6<br />
1<br />
0<br />
0<br />
1<br />
70.00<br />
7<br />
0<br />
1 LL1<br />
CD PLAYER<br />
1 0 131.75 0<br />
3 QLL2<br />
CD PLAYER<br />
3 0 153.00 0<br />
1 KDV33J<br />
CASSETTE DECK 0 1<br />
2 K2U40J<br />
CASSETTE DECK 0 2<br />
2 SKS11<br />
SPEAKER<br />
0 2<br />
9<br />
WORKING IT OUT<br />
Austin Sound Centre Inc.<br />
purchases $1,000 of merch<strong>and</strong>ise<br />
on account, terms 2/10, n/30 on<br />
September 15; $100 of<br />
merch<strong>and</strong>ise is returned for credit<br />
on September 20. Payment in full<br />
is made on September 25.<br />
Journalize <strong>the</strong> transactions.<br />
A:<br />
Sept. 15<br />
Inventory 1,000<br />
Accts. Pay. 1,000<br />
Sept. 20<br />
Accts. Pay. 100<br />
Inventory 100<br />
Sept. 25<br />
Accts. Pay. 900<br />
Inventory 18<br />
Cash 882<br />
Discount is $18 (2% $900). No<br />
discount is given on <strong>the</strong><br />
merch<strong>and</strong>ise returned.<br />
228 Part One The Basic Structure of <strong>Accounting</strong><br />
EXTENSION<br />
SOMME GLOBALE<br />
70.00<br />
131.75<br />
459.00<br />
660.75<br />
0<br />
0<br />
46.25<br />
0<br />
0<br />
707.00<br />
JVC’s credit terms of 3% 15, NET 30 DAYS can also be expressed as 3/15 n/30.<br />
This means that Austin Sound Centre Inc. may deduct 3 percent of <strong>the</strong> total amount<br />
due if Austin pays within 15 days of <strong>the</strong> invoice date. O<strong>the</strong>rwise, <strong>the</strong> full amount—<br />
NET—is due in 30 days. Terms of simply n/30 indicate that no discount is offered,<br />
<strong>and</strong> that payment is due 30 days after <strong>the</strong> invoice date. Terms of eom mean that<br />
payment is due by <strong>the</strong> end of <strong>the</strong> current month. However, a purchase after <strong>the</strong><br />
25th of <strong>the</strong> current month on terms of eom can be paid at <strong>the</strong> end of <strong>the</strong> next month.<br />
Many businesses that have computerized accounting systems program <strong>the</strong>ir system<br />
to flag invoices as <strong>the</strong> date for taking <strong>the</strong> discount approaches so <strong>the</strong> business<br />
can take advantage of <strong>the</strong> purchase discount.<br />
Let’s use <strong>the</strong> Exhibit 5-3 transaction to illustrate accounting for a purchase<br />
discount. For <strong>the</strong> moment, disregard GST <strong>and</strong> use <strong>the</strong> invoice total of $707.00 when<br />
recording purchases <strong>and</strong> purchase discounts. GST is discussed on page 234. Austin<br />
Sound Centre Inc. records <strong>the</strong> purchase on account as follows:<br />
May 27 Inventory ..................................................................... 707.00<br />
Accounts Payable.................................................. 707.00<br />
Purchased inventory on account.<br />
The accounting equation shows that a credit purchase of inventory increases both<br />
assets (Inventory) <strong>and</strong> liabilities (Accounts Payable), as follows:<br />
ASSETS = LIABILITIES + SHAREHOLDERS’ EQUITY<br />
Inventory = Accounts Payable<br />
$707 = $707 + 0<br />
8<br />
1 The seller.<br />
2 The invoice date, needed for<br />
determining whe<strong>the</strong>r <strong>the</strong> purchaser<br />
gets a discount for prompt payment<br />
(see 4).<br />
3 The purchaser. This inventory is invoiced<br />
(billed) <strong>and</strong> shipped to <strong>the</strong><br />
same address.<br />
4 Credit terms of <strong>the</strong> transaction: If it<br />
pays within 15 days of <strong>the</strong> invoice<br />
date, Austin Sound may deduct 3%<br />
of <strong>the</strong> total amount. O<strong>the</strong>rwise, <strong>the</strong><br />
full amount—net—is due in 30 days.*<br />
5 Austin ordered 6 CD players, 3 cassette<br />
decks, <strong>and</strong> 2 speakers.<br />
6 JVC shipped 5 CD players, no cassette<br />
decks, <strong>and</strong> no speakers.<br />
7 Quantity discount offered by JVC.<br />
8 Total invoice amount.<br />
9 Austin’s payment date. How much<br />
did Austin pay? (See 10.)<br />
10 Payment occurred 14 days after <strong>the</strong><br />
invoice date—within <strong>the</strong> discount period—so<br />
Austin paid $685.79 ($707 –<br />
3% discount). We will disregard GST<br />
for now.<br />
*A full discussion of discounts appears in<br />
<strong>the</strong> next section.