| COMPARE INCOME STATEMENTS FOR A SERVICE BUSINESS WITH A RETAIL BUSINESS Revenue Expenses Advertising Expense 500 Depreciation Expense 333 Electricty Expense 400 Printing & Stationery
Trang 1ACCOUNTING FOR RETAIL OPERATIONS 1
TOPIC 5
Trang 2Topic 5 Part 1
Learning
Objectives
On completion of this topic, you should be able to:
1 Identify the differences between a service business and
a merchandising business.
2 Understand the basic process and main features of the
goods and services tax (GST).
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COMPARE INCOME STATEMENTS FOR
A SERVICE BUSINESS WITH A RETAIL BUSINESS
Revenue
Expenses
Advertising Expense 500
Depreciation Expense 333
Electricty Expense 400
Printing & Stationery Expense 600
Salaries & Wages Expense 2,700
NET PROFIT $ 6,167
Kelly Cook eTravel Pty Ltd Statement of Profit or Loss for period May - June 2017
Revenue
Less Cost of sales (COS) 14,000
GROSS PROFIT 14,000 Operating Expenses
Advertising Expense 2,800 Depreciation Expense 800 Electricty Expense 400
NET PROFIT $ 6,210
for period May - June 2017 Cindy’s Fashion Bags Statement of Financial Performance
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GST IN PRACTICE
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RETAILING AND THE GST IN
AUSTRALIA
1 TAX INVOICE
2 The seller (supplier)
3 The purchaser (customer).
4 The invoice date
5 The credit terms of the transaction are 2/7, n/30
6 The details of the goods sold
7 The total invoice amount
GST inclusive – Total includes GST (which is 1/11 th of total)
GST exclusive – Total before GST (10% added on)
To calculate GST excl from GST incl divide by 1.1
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INVENTORY - RECORDING
TRANSACTIONS
RETAILER
• Purchases INVENTORY from suppliers with CASH or CREDIT
• May get a DISCOUNT for early payment
• May RETURN goods to supplier
CUSTOMER
• Retailers sell INVENTORY to retail customers for cash or credit
• They may give a DISCOUNT for early payment
• Customers may RETURN goods
AASB 102 Inventories
• Inventory means goods or property purchased and held for sale in the operating cycle of
a business
• Other assets may be sold from time to time but do not constitute inventory
• Also know as stock or stock in trade
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ACCOUNTING FOR INVENTORY
Two distinctly
different
inventory
systems
PERPETUAL INVENTORY SYSTEM
record of all goods bought and sold
is sold
• As a result, the balance in the inventory account is the ENDING inventory amount.
PERIODIC INVENTORY SYSTEM
• A physical stock take (an actual count) of inventory is required at end of period to update
inventory and calculate COST OF SALES (COS)
Trang 8ACCOUNTING FOR RETAIL OPERATIONS 2
TOPIC 5
Trang 9Topic 5 Part 2 Learning
Objectives
On completion of this topic, you should be able to:
1 Record purchases transactions under a perpetual
inventory system incorporating GST.
2 Record sales transactions under a perpetual inventory system incorporating GST.
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Date Particulars Post Ref DEBIT CREDIT
3/7/17 Inventory 140 700.00
GST Paid (Receiveable) 145 70.00
Accounts Payable 200 770.00
(Purchase inventory on credit)
3/7/17 Inventory 140 70.00
GST Paid (Receiveable) 145 7.00
Cash at Bank 100 77.00
(Freight-in)
15/7/17 Accounts Payable 200 770.00
Cash at Bank 310 746.90
Discounts Received 418 21.00
GST Collected (Payable) 235 2.10
(Payment of account with 3% discount)
GENERAL JOURNAL
300 Open Bal
Open Bal 2,400
Salaries payable #220
GST Collected #235 Accts Rec #110
Sales Revenue #410 Inventory #140
GENERAL LEDGER T-ACCOUNTS
GST Paid #145
Sales Discounts #415
Discounts Rec'vd #418
Cost of Sales #520
Salaries & Wages # 590
Date
03-July-2017 Kelly Cook eTravel P/L purchases inventory from a supplier, Fony Inc,
for $700 (plus 10% GST) on credit terms of 3/15, NET 30 DAYS.
03-July-2017 Kelly Cook eTravel P/L pays freight-in cost of $77 (inc GST) in cash.
15-July-2017 Kelly Cook eTravel P/L pays the Fony Inc account (within 15 day
discount period).
Kelly Cook eTravel Pty Ltd
Retail Transactions for the month of July 2017 Transaction
AASB102: FREIGHT IN charges should be included in cost of inventory
(impacts Gross Profit) for the business When the business makes a sale and delivers the goods to the customer
-FREIGHT OUT is an operating expense that only impacts Net Profit.
DISCOUNTS RECEIVED reduce the cost of sales for the business
3/7/17
15/7/17
3/7/17
Inventory
GST Paid (Receivable)
Accounts Payable
(Purchase inventory on credit)
(Freight in)
(Payment of acct with 3% discount)
GST Paid (Receivable)
Cash at Bank Inventory
Accounts Payable
Cash at Bank Discounts Received GST Collected (Payable)
140 145 200
140 145 100
200 100 418
21.00 746.90 770.00
77.00 7.00
70.00
770.00 70.00
700.00
3/7/17
3/7/17 3/7/17
3/7/17
3/7/17
3/7/17
70 700
770
70
7
77
770 746.90
21
2.10
15/7/17
15/7/17
15/7/17 15/7/17
Sales Ret & Allow #412
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Date Particulars Post Ref DEBIT CREDIT
19/7/17 Cash at Bank 100 330.00
GST Collected (Payable) 235 30.00
(Cash Sale)
19/7/17 Cost of Sales 520 190.00
(Cost of inventory sold)
20/7/17 Accounts Receivable 110 792.00
GST Collected (Payable) 235 72.00
(Credit Sale)
20/7/17 Cost of Sales 520 470.00
(Cost of inventory sold)
21/7/17 Salaries & Wages Payable 220 300.00
Salaries & Wages Expense 590 900.00
(salaries expense)
22/7/17 Sales Returns & Allows 412 60.00
GST Paid (Receiveable) 145 6.00
Accounts Receivable 110 66.00
(Receipt of returned goods)
22/7/17 Inventory 140 40.00
(placed goods back in inventory)
26/7/17 Cash at Bank 100 700.70
Sales Discounts (Allowed) 415 13.00
GST Paid (Receiveable) 145 1.30
(Cash collection within discount period)
GENERAL JOURNAL
SALES RETURNS & ALLOWANCES (Discount Allowed) are subtracted from sales revenue to
calculate net revenue which impacts Gross Profit for the business.
19/7/17
20/7/17
20/7/17
21/7/17
22/7/17
22/7/17
26/7/17
Cost of Sales
Inventory
(Cost of inventory sold)
Accounts Receivable
Cash at Bank
Accounts Receivable
GST Paid (Receivable)
Sales Returns & Allowances
(Cash collection within discount period)
Accounts Receivable
GST Paid (Receivable)
Sales Discounts (Allowed)
Sales Revenue
GST Collected (Payable)
Cost of Sales
(Credit Sale)
Inventory
(Salaries Expense)
Salaries & Wages Expense
Cash at Bank
Salaries & Wages Payable
(Receipt of returned goods)
Inventory
Cost of Sales
(Placed good back in inventory)
100
(Cost of inventory sold)
19/7/17
Cash at Bank
Sales Revenue
GST Collected (Payable)
(Cash sale)
410 235
520 140
110 410 235
520 140
220 100 590
412 145 110
140 520
100 415 145 110
330.00
300.00 30.00
190.00
190.00
72.00 720.00 792.00
470.00
470.00
300.00 900.00
1200.00
60.00 6.00
66.00
40.00
40.00
711.48 13.20 1.32
726.00
15-July-2017 Kelly Cook eTravel P/L pays the Fony Inc account (within 15 day discount period).
Date 19-July-2017 Kelly Cook eTravel P/L makes a cash sale of $330 (inc GST) to ABC, cost of sales is $190.
20-July-2017 Kelly Cook eTravel P/L makes a credit sale of $792 (inc GST) to RightLaw on credit terms 2/10 NET 30 DAYS, cost of these sales is $470.
21-July-2017 Kelly Cook eTravel P/L pays cash expenses of 1,200 for Salaries & Wages.
22-July-2017 RightLaw returns $66 (inc GST) of goods that cost $40 (ex GST).
26-July-2017 RightLaw settles their account within the 2% discount period.
Kelly Cook eTravel Pty Ltd
Retail Transactions for the month of July 2017 Transaction
19/7/17
19/7/17
19/7/17
19/7/17
300 30 330
19/7/17 190
190
20/7/17
20/7/17
20/7/17
720
72 792
20/7/17
20/7/17
470
470 21/7/17
21/7/17
21/7/17
300 1200
900
22/7/17
22/7/17
22/7/17 66
6
60 22/7/17
22/7/17
40
40
26/7/17 26/7/17
26/7/17 26/7/17
13.20 1.32
726
711.48
20,917.58
2,400
150
84.32
620
1020 104.10
Trang 12ACCOUNTING FOR RETAIL OPERATIONS 1
TOPIC 5
Trang 13Topic 5 Part 3
Learning
Objectives
On completion of this topic, you should be able to:
1 Prepare a fully classified statement of profit or loss.
2 Use ratios to analyse profitability for a retail business.
3 Remitting GST to the government.
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ANALYSING FINANCIAL STATEMENTS
FOR DECISION MAKING
Revenue
Less Sales Returns & Allowances -1190
Less Sales Discounts Allowed -70
Net Sales Revenue 47,240
Less Cost of sales (COS) -14,230
GROSS PROFIT 33,010 Operating Expenses
Total operating Expenses 21,320
NET PROFIT $ 11,690
Kelly Cook eTravel Pty Ltd Statement of Financial Performance for 6 month period December 2017
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ANALYSING FINANCIAL
STATEMENTS FOR
DECISION MAKING
generated by the sale of products or services, before
operating expenses – that how effective the business is in
buying/producing & selling
operations side of the business
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ANALYSING FINANCIAL
STATEMENTS FOR
DECISION MAKING
Central
Operating
Expenses To Sales
Ratio
Net Sales
47,240
Revenue
Gross Sales Revenue 48,500 Less Sales Returns & Allowances -1190 Less Sales Discounts Allowed -70
Net Sales Revenue 47,240 Less Cost of sales (COS) -14,230
Operating Expenses
Advertising Expense 6,100 Depreciation Expense 1,000 Electricty Expense 420 Rent expense 6,600 Salaries Expense 7,200
NET PROFIT $ 11,690
Kelly Cook eTravel Pty Ltd Statement of Financial Performance for 6 month period December 2017
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3/7/17 70 2.10 15/7/17 3/7/17 7 30 19/7/17 22/7/17 6 72 20/7/17 26/7/17 1.30 104
84.30 GST Paid #145 GST Collected #235
REMITTING GST
TO THE ATO