Chapter 3 Consists of goods purchased or made and held for resale Most health care only carry a small portion in inventory Provide services not sell goods Except for Pharmacies and medical supply firms ID: 619952
Download Presentation The PPT/PDF document "Part 3" is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Slide1
Part 3
Chapter 3 Slide2
Consists of goods purchased or made and held for resale
Most health care only carry a small portion in inventory Provide services not sell goods
Except for: Pharmacies and medical supply firms
Difficult to valueUse a lot of goods and hard to determine how much of each individual unit (example, gloves) Value of inventory has to be presented in dollar termsFIFO or LIFOAffects value of inventory but also the cost of goods soldCost of goods sold = Beginning inventory + Net purchases – Ending Inventory
INVENTORYSlide3
HHSC
: Determining cost of goods sold; first in-first-out inventory method
Opened on January 2
nd with no inventory January 5th = Purchased, cash, 200 frozen meals to be resold to its clients = $2.50January 20th = purchased, 200 more meals, now price is risen to $3.00January 31, inventory found 100 meals
Table
3-10
Date
Quantity
Price/UnitTotal ValueJanuary 5th 2002.50500January 20th2003.00600Available for sale in January400 1,100Minus January 31100 -Sold in January 200 @ 2.50100 @ 3.00300 800January 31st inventory100 @ 3.00100 300Slide4
HHSC
: determining cost of goods sold; last-in first-out inventory method
Opened
on January 2nd with no inventory January 5th = Purchased, cash, 200 frozen meals to be resold to its clients = $2.50January 20th = purchased, 200 more meals, now price is risen to $3.00
January 31, inventory found 100 meals
Table
3-11
Date
QuantityPrice/UnitTotal ValueJanuary 5th 2002.50500January 20th 2003.00600Available for sale in January400 1,100Minus January 31100 -Sold in January200 @ 3.00100 @ 2.50300 850January 31st, inventory100 @ 2.50100 250Slide5
Organization’s choice
Doesn’t truly reflect on how organizations are using their inventory, just an accounting methodUse depends on what they are looking towards doing? Tax value or Investor value
Which one do you use?