Explain merchandise in transit, Accounting Basics

Assignment Help:

Q. Explain Merchandise in transit?

Merchandise in transit is merchandise in the hands of a shipment company on the date of a physical inventory. As stated above buyers should record merchandise in transit at the end of the accounting period as a purchase if the goods were shipped FOB shipping point as well as they have received title to the merchandise. Generally the goods belong to the party who ultimately tolerate the transportation charges.

When accounting personnel know the beginning as well as ending inventories and the various items making up the net cost of purchases they are able to determine the cost of goods sold. To exemplify suppose the subsequent account balances for Hanlon Retail Food Store as of 2010 December 31

Merchandise Inventory, 2010 January 1                     $ 24,000          Dr.

Purchases                                                                    167,000           Dr.

Purchase Discounts                                                     3,000               Cr.

Purchase Returns and Allowances                              8,000               Cr.

Transportation-In                                                        10,000             Dr.

By taking a physical inventory Hanlon resolute the 2010 December 31 merchandise inventory to be USD 31000. Hanlon then computed its cost of goods sold as shown in Exhibit 38. This calculation appears in a section of the income statement directly below the calculation of net sales.


Related Discussions:- Explain merchandise in transit

Adjusting entry, office supplies on hand at year end amounted to 3000

office supplies on hand at year end amounted to 3000

Difference between fica and federal income taxes, Difference between Fica a...

Difference between Fica and federal income taxes  Employers should file Form 940 with the IRS at the end of every calendar quarter. There are several rules about when to turn i

Amount of stockholders'' equity, At the starting of the year, Hernandez Com...

At the starting of the year, Hernandez Company had total assets of $872,310 and total liabilities of $497,500. (a) If total assets enhanced $147,320 during the year and total li

Abc company uses cash basis accounting for its records., ABC Company uses c...

ABC Company uses cash basis accounting for its records. During 2010, ABC collected $400,000 from its customers, made payments of $300,000 to its suppliers for inventory, and paid

Explain inventory turnover ratio, Q. Explain Inventory turnover ratio? ...

Q. Explain Inventory turnover ratio? An important ratio for managers, investors, and creditors to consider when analyzing a company's inventory is the inventory turnover ratio.

Explain business entity concept, Q. Explain business entity concept? Su...

Q. Explain business entity concept? Suppose for instance that you own two businesses 1) a physical fitness centre and 2) a horse stable. As per to the business entity concept y

Difference between billable and non-billable expenses, Billable expenses ar...

Billable expenses are those expenses incurred by you on behalf of your client in performing duties / supply and service. These expenses are recoverable from your customer by way of

Journal, transactions can be even directly entered to the ledger elaborate ...

transactions can be even directly entered to the ledger elaborate and explain why journal is necessary

Explain about accrual basis and periodicity, Q. Explain about Accrual basis...

Q. Explain about Accrual basis and periodicity? Accrual basis and periodicity demonstrated that financial statements more accurately reflect the financial status and operations

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd