 Inventory is asset:

(a) for sale in normally operating activity;

(b) production process and to be sold; or
(c) raw material or supplies to be used in production
process or giving service
 Service Supplies
Firm
Merchandising Merchandise
Firm Inventory
Kind of Firm
Raw
Manufacturing Firm Material

Goods In
Process

Finished
Goods
 Periodic
Inventory System
Inventory
Record System
Perpetual
Inventory System
 JOURNAL
Transaction Periodic Perpetual

Purchase Purchase Merchandise Inventory

Cash In Bank/ Acc. Payable Cash In Bank/ Acc. Payable
Freight Paid Freight Paid Cost of Goods Sold
Cash In Bank/ Acc. Payable Cash In Bank/ Acc. Payable

Purchase Return Cash In Bank/ Acc. Payable Cash In Bank/ Acc. Payable
Purchase Return Merchandise Inventory
Sales Cash In Bank/ Acc. Receivable Cash In Bank/ Acc. Receivable
Sales Sales
Cost of Goods Sold
Merchandise Inventory

Sales Return Sales Return Sales Return

Cash In Bank/ Acc. Receivable Cash In Bank/ Acc. Receivable
Merchandise Inventory
Cost of Goods Sold
 JOURNAL
Periodic Perpetual

Purchase Discount Account Payable Account Payable

Purchase discount Cost of Goods sold
Cash in Bank Cash in Bank

Sales Discount Cash in Bank Cash in Bank

Sales Discount Sales Discount
Account Receivable Account Receivable
 COUNT COST OF GOODS
SOLD in Periodic Record
Beginning System
Merchandise
Inventory

Inventory Ending
Net Purchase available to Merchandise
sale Inventory

Cost of Goods Sold

Inventory Quantity

Physical Counting

Based on the Ownership of Inventory

Goods In Transit

Consigned Goods
 Goods In Transit

FOB SHIPPING POINT

Seller Customer

The owner is
customer
 Goods In Transit

FOB DESTINATION

Seller Customer

The owner is
customer
Consigned Goods

Consigment is sale’s strategy in which consignor ,

according to the agreement entrust the goods to
consignee.
The ownership of goods is consignor until the
consigned goods sold to the third parties , and
because of that consignee get comission on sale
TRANSACTION CONSIGNOR CONSIGNEE

Giving Consigned Goods Inventory No Entries

Merchandise Inventory
Selling No Entries Cash / Acc. Receivable
Consigned Payable
Payment Cash / Acc. Receivable Consigned Payable
Commission expense Commission revenue
Sales Cash / Acc. Receivable
Cost of Goods Sold
Consigned Goods Inventory
Inventory Measurement
The lowest Cost between historical cost
and sales cost minus by expense for
finishing and selling
 Inventory Recognition
The inventory will be recognized when
received or the ownership and/or the
authority change.
 Value Inventory System

1. Cost Methods
- Special Identification
- Assumption of current cost
a. First In First Out
b. Weighted Average Cost
2. Market Methods
3. Lower of Cost or Market
4. Net Realizable Value
 Thank you
for your attention !