copyright © 2011 mcgraw-hill ryerson limited 8-1 powerpoint author: robert g. ducharme, macc, ca...
TRANSCRIPT
Copyright © 2011 McGraw-Hill Ryerson Limited
8-1
PowerPoint Author:
Robert G. Ducharme, MAcc, CAUniversity of Waterloo, School of Accounting and Finance
FINANCIALACCOUNTINGFourth Canadian Edition LIBBY, LIBBY, SHORT, KANAAN, GOWING
FINANCIALACCOUNTINGFourth Canadian Edition LIBBY, LIBBY, SHORT, KANAAN, GOWING
Reporting and Interpreting Cost of Sales and Inventory
Chapter 8
8-2
Copyright © 2011 McGraw-Hill Ryerson Limited
Understanding the Business
Provide sufficient quantities of high-quality inventory.
Provide sufficient quantities of high-quality inventory.
Minimize the costs of carrying inventory.
Minimize the costs of carrying inventory.
Primary Goals of Inventory
Management
Primary Goals of Inventory
Management
Provides accurate information
Provides accurate information
Provides up-to-date information
Provides up-to-date information
Provides information to help protect assets
Provides information to help protect assets
Roles of the Accounting
System
Roles of the Accounting
System
LO 1
8-3
Copyright © 2011 McGraw-Hill Ryerson Limited
Items Included in Inventory
Inventorytangible property held for sale in the normal course of business
or used in producing goods or services for sale
Tangible Held for Sale
Used to Produce Goods or Services
Merchandise InventoryRaw Materials Inventory
Work in Process InventoryFinished Goods Inventory
LO 1
8-4
Copyright © 2011 McGraw-Hill Ryerson Limited
Costs Included in Inventory Purchases
The cost principlecost principle requires that inventory be recorded at the price paid or the
consideration given.
Include all costsall costs incurred to bring the asset to useable or saleable condition.
Invoice Price
Freight
Inspection Costs
Preparation Costs
LO 1
8-5
Copyright © 2011 McGraw-Hill Ryerson Limited
Flow of Inventory Costs
MerchandisePurchases
MerchandisePurchases
Cost ofSales
Cost ofSales
MerchandiseInventory
MerchandiseInventory
Merchandiser
RawMaterials
RawMaterials
Raw MaterialsInventory
Raw MaterialsInventory
Work in ProcessInventory
Work in ProcessInventory
Finished GoodsInventory
Finished GoodsInventory
Cost ofSales
Cost ofSales
Manufacturer
DirectLabourDirectLabour
FactoryOverheadFactory
OverheadLO 1
8-6
Copyright © 2011 McGraw-Hill Ryerson Limited
Nature of Cost of Sales
BeginningBeginningInventoryInventory
BeginningBeginningInventoryInventory
PurchasesPurchasesfor the Periodfor the PeriodPurchasesPurchases
for the Periodfor the Period
Ending InventoryEnding Inventory(Statement of (Statement of
Financial Position)Financial Position)
Ending InventoryEnding Inventory(Statement of (Statement of
Financial Position)Financial Position)
Goods AvailableGoods Availablefor Salefor Sale
Goods AvailableGoods Availablefor Salefor Sale
Cost of SalesCost of Sales(Income Statement)(Income Statement)
Cost of SalesCost of Sales(Income Statement)(Income Statement)
Beginning inventory + Purchases = Goods Available for Sale
Goods Available for Sale – Ending inventory = Cost of sales
Beginning inventory + Purchases = Goods Available for Sale
Goods Available for Sale – Ending inventory = Cost of salesLO 1
8-7
Copyright © 2011 McGraw-Hill Ryerson Limited
Internal Control of Inventory
Separation of inventory accounting and physical
handling of inventory.
Storage in a manner that protects from theft and
damage.
Limiting access to authorized employees.
Maintaining perpetual inventory records.
Comparing perpetual records to periodic
physical counts.
LO 2
8-8
Copyright © 2011 McGraw-Hill Ryerson Limited
Perpetual and Periodic Inventory Systems
Provides Provides up-to-dateup-to-date inventory records.inventory records.
Provides Provides up-to-dateup-to-date inventory records.inventory records.
Provides Provides up-to-date up-to-date cost of sales records. cost of sales records. Provides Provides up-to-date up-to-date
cost of sales records. cost of sales records.
Perpetual Perpetual SystemSystem
Perpetual Perpetual SystemSystem
In a periodic inventory system, ending inventory and cost of sales are determined at the end of the accounting period
based on a physical count.
LO 2
8-9
Copyright © 2011 McGraw-Hill Ryerson Limited
Perpetual and Periodic Inventory Systems
Inventory System
Item Periodic System Perpetual System
Beginning InventoryCarried over from
prior periodCarried over from
prior period
Add: PurchasesAccumulated in the Purchases account
Accumulated in the Inventory account
Equals:
Less: Ending InventoryMeasured at end of period by physical
inventory count
Perpetual record updated at every
sale
Cost of SalesComputed as a
residual amount at end of period
Measured at every sale based on
perpetual record
Cost of Goods Available for Sale
LO 2
8-10
Copyright © 2011 McGraw-Hill Ryerson Limited
Comparison of Periodic and Perpetual Systems
Now, let’s compare the
various entries that are made
when using the periodic and
perpetual inventory systems.
LO 2
8-11
Copyright © 2011 McGraw-Hill Ryerson Limited
Comparison of Periodic and Perpetual Systems
LO 2
Transaction Periodic PerpetualMerchandise purchased from supplier on account. Purchases (T) XX Inventory (A) XX
Trade Payables (L) XX Trade Payables (L) XXMerchandise returned to supplier. Trade Payables (L) XX Trade Payables (L) XX
Purchases Returns & All. (T) XX Inventory (A) XXMerchandise sold to customer on account. Trade Receivables (A) XX Trade Receivables (A) XX
Sales (R) XX Sales (R) XX
Cost of Sales (E) XX Inventory (A) XX
Purchases Returns and Allowances is subtracted from Purchases on the income statement.
Purchases Returns and Allowances is subtracted from Purchases on the income statement.
8-12
Copyright © 2011 McGraw-Hill Ryerson Limited
Comparison of Periodic and Perpetual Systems
LO 2
Transaction Periodic PerpetualMerchandise purchased from supplier Purchases (T) XX Inventory (A) XX
on account. Trade Payables (L) XX Trade Payables (L) XXMerchandise returned to Trade Payables (L) XX Trade Payables (L) XX
supplier. Purchases Returns & Allow.(T) XX Inventory (A) XX
Merchandise sold to Trade Receivables (A) XX Trade Receivables (A) XX
customer on Sales (R) XX Sales (R) XXaccount.
Cost of Sales (E) XX
Inventory (A) XX
This entry is recorded at retail.
This entry is recorded at cost.
8-13
Copyright © 2011 McGraw-Hill Ryerson Limited
Comparison of Periodic and Perpetual Systems
LO 2
Transaction Periodic PerpetualMerchandise returned by customer. Sales Returns and Allow. (XR) XX Sales Returns and Allow. (XR) XX
Trade Receivables (A) XX Trade Receivables (A) XX
Inventory (A) XX Cost of Sales (E) XXThis is recorded at
retail.
This entry is recorded at cost.
8-14
Copyright © 2011 McGraw-Hill Ryerson Limited
Comparison of Periodic and Perpetual Systems
LO 2
Transaction Periodic PerpetualMerchandise returned by customer. Sales Returns and Allow. (XR) XX Sales Returns and Allow. (XR) XX
Trade Receivables (A) XX Trade Receivables (A) XX
Inventory (A) XX Cost of Sales (E) XX
At end of accounting period. Cost of Sales (E) XX No entry.
Inventory (A) (beginning) XX Purchases (T) XX
Inventory (A) (ending) XX Cost of Sales (E) XX
8-15
Copyright © 2011 McGraw-Hill Ryerson Limited
Methods for Estimating Inventory
LO 2
I use the periodicinventory method.Can you help me
estimate inventory?
I sure can, if you can give
me some information.
8-16
Copyright © 2011 McGraw-Hill Ryerson Limited
Methods for Estimating Inventory
LO 2
I know sales,beginning inventory,
purchases, and my gross margin
is 30%.
Let’s constructan income
statement using your gross
margin.
8-17
Copyright © 2011 McGraw-Hill Ryerson Limited
Methods for Estimating Inventory
LO 2
Sales 100%Cost of sales 70%Gross margin 30%
You told me that your sales are $200,000, beginning inventory is $4,500, and purchases are $150,000, so your income statement looks like this . . .
Sales 200,000$ Beginning inventory 4,500$ Purchases 150,000
Cost of goods available for sale 154,500 Ending inventory ?
Cost of sales 140,000
Gross margin 60,000$
8-18
Copyright © 2011 McGraw-Hill Ryerson Limited
Methods for Estimating Inventory
LO 2
Estimated ending inventory must be $14,500 ($154,500 – $140,000).
Sales 200,000$ Beginning inventory 4,500$ Purchases 150,000 Cost of goods available for sale 154,500 Ending inventory 14,500 Cost of sales 140,000 Gross margin 60,000$
8-19
Copyright © 2011 McGraw-Hill Ryerson Limited
Errors in Measuring Ending Inventory
Errors in Measuring InventoryEnding Inventory Beginning Inventory
Overstated Understated Overstated Understated
Ending Inventory + - N/A N/A
Retained Earnings + - - +
Goods Available for Sale N/A N/A + -Cost of Sales - + + -Gross Profit + - - +Profit + - - +
Effect on Current Period's Statement of Financial Position
Effect on Current Period's Income Statement
LO 2
Beginning inventory + Purchases – Ending inventory = Cost of sales
8-20
Copyright © 2011 McGraw-Hill Ryerson Limited
Exhibit 8.4: Inventory Error:Understatement of Ending Inventory
LO 2
ERROR: UNDERSTATEMENT OF ENDING INVENTORY
Year of the error Following YearBeginning inventory NE U*Ending inventory U NECost of sales O UGross profit U OProfit before income tax U OIncome tax expense U OProfit U ORetained earnings, end of year U NE
*U = Understated; O = Overstated; NE = No Effect
8-21
Copyright © 2011 McGraw-Hill Ryerson Limited
If the 2011 ending inventory is understated by $3,000, which of the following is true for
2011?
a. Beginning Inventory was understated.b. Cost of Sales will be understated.c. Gross Profit will be overstated.d. Profit will be understated.
Question
LO 2
8-22
Copyright © 2011 McGraw-Hill Ryerson Limited
If the 2011 ending inventory is understated by $3,000, which of the following is true for
2011?
a. Beginning Inventory was understated.b. Cost of Sales will be understated.c. Gross Profit will be overstated.d. Profit will be understated.
If the 2011 ending inventory is understated by $3,000, which of the following is true for
2011?
a. Beginning Inventory was understated.b. Cost of Sales will be understated.c. Gross Profit will be overstated.d. Profit will be understated.
Errors in Measuring InventoryBeginning Inventory Ending Inventory
Overstated Understated Overstated Understated
Effect on Current Period's Statement of Financial Position
Ending Inventory N/A N/A + -Retained Earnings - + + -Effect on Current Period's Income Statement
Goods Available for Sale + - N/A N/A
Cost of Sales + - - +Gross Profit - + + -Profit - + + -
Beginning inventory + Purchases – Ending inventory = Cost of sales
Question
LO 2
8-23
Copyright © 2011 McGraw-Hill Ryerson Limited
If the 2011 ending inventory is understated by $3,000, which of the following is true for
2012?
a. Beginning Inventory was understated.b. Cost of Sales will be understated.c. Gross Profit will be overstated.d. All of the above.
Question
LO 2
8-24
Copyright © 2011 McGraw-Hill Ryerson Limited
Question
If the 2011 ending inventory is understated by $3,000, which of the following is true for
2012?
a. Beginning Inventory was understated.b. Cost of Sales will be understated.c. Gross Profit will be overstated.d. All of the above.
If the 2011 ending inventory is understated by $3,000, which of the following is true for
2012?
a. Beginning Inventory was understated.b. Cost of Sales will be understated.c. Gross Profit will be overstated.d. All of the above.
Remember: The ending inventory for 2011 becomes the beginning inventory for 2012.
Errors in Measuring InventoryBeginning Inventory Ending Inventory
Overstated Understated Overstated Understated
Effect on Current Period's Statement of Financial Position
Ending Inventory N/A N/A + -Retained Earnings - + + -Effect on Current Period's Income Statement
Goods Available for Sale + - N/A N/A
Cost of Sales + - - +Gross Profit - + + -Net Income - + + -
Beginning inventory + Purchases – Ending inventory = Cost of sales
LO 2
8-25
Copyright © 2011 McGraw-Hill Ryerson Limited
Inventory Costing Methods
Total Dollar Amount of Goods Total Dollar Amount of Goods Available for SaleAvailable for Sale
Total Dollar Amount of Goods Total Dollar Amount of Goods Available for SaleAvailable for Sale
Ending InventoryEnding Inventory
Inventory Costing Method
Cost of SalesCost of Sales
Inventory Costing Methods1.Specific Identification2.First-in, First-out (FIFO)3.Weighted Average
LO 3
8-26
Copyright © 2011 McGraw-Hill Ryerson Limited
Specific Identification
When units are sold, the
specific cost of the unit sold is
added to cost of sales.
When units are sold, the
specific cost of the unit sold is
added to cost of sales.
LO 3
8-27
Copyright © 2011 McGraw-Hill Ryerson Limited
Cost Flow Assumptions
The choice of an inventory costing method is not based on the physical flow of goods
on and off the shelves.
FIFO WeightedAverage
LO 3
8-28
Copyright © 2011 McGraw-Hill Ryerson Limited
First-In, First-Out Method
Cost of SalesCost of SalesCost of SalesCost of SalesOldest CostsOldest CostsOldest CostsOldest Costs
Ending Ending InventoryInventoryEnding Ending
InventoryInventoryRecent CostsRecent CostsRecent CostsRecent Costs
LO 3
8-29
Copyright © 2011 McGraw-Hill Ryerson Limited
First-In, First-Out
Remember: Remember: The costs of The costs of most most recent recent
purchasespurchases are are in ending in ending inventory. inventory. Start with Start with
11/29 and add 11/29 and add units units
purchased purchased until you reach until you reach the number in the number in
ending ending inventory.inventory.
Computers, Inc.Mouse Pad Inventory
Date Units $/Unit TotalBeginning Inventory 1,000 5.25$ 5,250.00$ Purchases:Jan. 3 500 5.30 2,650.00 June 20 300 5.60 1,680.00 Sept. 15 250 5.80 1,450.00 Nov. 29 200 5.90 1,180.00 Goods Available for Sale 2,250 12,210.00$
Ending Inventory 1,200 ?
Cost of Sales 1,050 ?
Computers, Inc.Mouse Pad Inventory
Date Units $/Unit TotalBeginning Inventory 1,000 5.25$ 5,250.00$ Purchases:Jan. 3 500 5.30 2,650.00 June 20 300 5.60 1,680.00 Sept. 15 250 5.80 1,450.00 Nov. 29 200 5.90 1,180.00 Goods Available for Sale 2,250 12,210.00$
Ending Inventory 1,200 ?
Cost of Sales 1,050 ?
LO 3
8-30
Copyright © 2011 McGraw-Hill Ryerson Limited
First-In, First-Out
Now, we have allocated the cost to all Now, we have allocated the cost to all 1,200 units in ending inventory.1,200 units in ending inventory.
Now, we have allocated the cost to all Now, we have allocated the cost to all 1,200 units in ending inventory.1,200 units in ending inventory.
Beg. Inv. 1,000 @ 5.25$ Jan. 3 500 @ 5.30 450 @ $5.30June 20 300 @ 5.60 300 @ $5.60Sept. 15 250 @ 5.80 250 @ $5.80Nov. 29 200 @ 5.90 200 @ $5.90
1,200 Units Units
6,695$ Cost
Ending Inventory Cost of SalesGiven Information
LO 3
8-31
Copyright © 2011 McGraw-Hill Ryerson Limited
First-In, First-Out
Now, we have allocated the cost Now, we have allocated the cost to all 1,050 units sold.to all 1,050 units sold.
Now, we have allocated the cost Now, we have allocated the cost to all 1,050 units sold.to all 1,050 units sold.
Beg. Inv. 1,000 @ 5.25$ 1,000 @ 5.25$ Jan. 3 500 @ 5.30 450 @ $5.30 50 @ 5.30 June 20 300 @ 5.60 300 @ $5.60Sept. 15 250 @ 5.80 250 @ $5.80Nov. 29 200 @ 5.90 200 @ $5.90
1,200 Units 1,050 Units
6,695$ Cost 5,515$ Cost
Ending Inventory Cost of SalesGiven Information
LO 3
$12,210
8-32
Copyright © 2011 McGraw-Hill Ryerson Limited
First-In, First-Out
Here is the Here is the cost of cost of ending ending
inventory inventory and cost and cost of sales of sales using using FIFO.FIFO.
Computers, Inc.Mouse Pad Inventory
Date Units $/Unit TotalBeginning Inventory 1,000 5.25$ 5,250.00$ Purchases:Jan. 3 500 5.30 2,650.00 June 20 300 5.60 1,680.00 Sept. 15 250 5.80 1,450.00 Nov. 29 200 5.90 1,180.00 Goods Available for Sale 2,250 12,210.00$
Ending Inventory 1,200 6,695.00$
Cost of Sales 1,050 5,515.00$
Computers, Inc.Mouse Pad Inventory
Date Units $/Unit TotalBeginning Inventory 1,000 5.25$ 5,250.00$ Purchases:Jan. 3 500 5.30 2,650.00 June 20 300 5.60 1,680.00 Sept. 15 250 5.80 1,450.00 Nov. 29 200 5.90 1,180.00 Goods Available for Sale 2,250 12,210.00$
Ending Inventory 1,200 6,695.00$
Cost of Sales 1,050 5,515.00$
LO 3
8-33
Copyright © 2011 McGraw-Hill Ryerson Limited
Average Cost Method
When a unit is sold, the average cost of each unit in inventory is assigned to
cost of sales.
When a unit is sold, the average cost of each unit in inventory is assigned to
cost of sales. Cost of Goods Available for
Sale
Number of Units
Available for Sale
÷
LO 3
Ending Inventory
Units in Ending Inventory x Average Cost per Unit
Cost of Good Sold
Units Sold x Average Cost per Unit
8-34
Copyright © 2011 McGraw-Hill Ryerson Limited
Average Cost Method
12,210$ 2,250
= $5.42667
Weighted Average Cost
1,200 × 5.42667$
1,050 × 5.42667$
Computers, Inc.Mouse Pad Inventory
Date Units $/Unit TotalBeginning Inventory 1,000 5.25$ 5,250.00$ Purchases:Jan. 3 500 5.30 2,650.00 June 20 300 5.60 1,680.00 Sept. 15 250 5.80 1,450.00 Nov. 29 200 5.90 1,180.00 Goods Available for Sale 2,250 12,210.00$
Ending Inventory 1,200 6,512.00$
Cost of Sales 1,050 5,698.00$
Computers, Inc.Mouse Pad Inventory
Date Units $/Unit TotalBeginning Inventory 1,000 5.25$ 5,250.00$ Purchases:Jan. 3 500 5.30 2,650.00 June 20 300 5.60 1,680.00 Sept. 15 250 5.80 1,450.00 Nov. 29 200 5.90 1,180.00 Goods Available for Sale 2,250 12,210.00$
Ending Inventory 1,200 6,512.00$
Cost of Sales 1,050 5,698.00$
LO 3
8-35
Copyright © 2011 McGraw-Hill Ryerson Limited
Comparison of Methods
FIFO
Weighted Average
Net sales 25,000$ 25,000$ Cost of sales: Merchandise inventory, beginning 5,250$ 5,250$ Net purchases 6,960 6,960 Goods available for sale 12,210$ 12,210$ Merchandise inventory, ending 6,695 6,512 Cost of sales 5,515$ 5,698$ Gross profit 19,485$ 19,302$ Operating expenses 750 750 Profit before taxes 18,735$ 18,552$ Income taxes expense (30%)* 5,621 5,566 Profit 13,114$ 12,986$
* Tax expense amounts were rounded.
Computers, Inc.Income Statement
For Year Ended December 31, 2011
LO 3
In periods of rising prices,
FIFO results in the highest
ending inventory,
gross profit, income tax
expense, and profit, and the lowest cost of
sales.
In periods of rising prices,
FIFO results in the highest
ending inventory,
gross profit, income tax
expense, and profit, and the lowest cost of
sales.
8-36
Copyright © 2011 McGraw-Hill Ryerson Limited
Financial Statement Effects of Costing Methods
Advantages of MethodsAdvantages of Methods
Ending inventory approximates
current replacement cost.
Ending inventory approximates
current replacement cost.
First-In, First-OutFirst-In, First-Out
LO 3
Weighted Average
Weighted Average
Smoothes out price changes.
Smoothes out price changes.
8-37
Copyright © 2011 McGraw-Hill Ryerson Limited
International PerspectiveLIFO and International Comparisons
While U.S. GAAP allows companies to choose between FIFO, LIFO, and weighted average inventory methods, International
Financial Reporting Standards (IFRS) and Canadian Accounting Standards for Private Enterprises (ASPE) prohibit
the use of LIFO.
These differences can create comparability problems when one attempts to compare companies across international
borders.
IFRS requires that the same method be used for all
inventory items that have a similar nature and use.
GAAP allows different inventory accounting methods to be used for different types
of inventory items.
LO 3
8-38
Copyright © 2011 McGraw-Hill Ryerson Limited
Managers Choice of Inventory Methods
Profit EffectsManagers prefer to report higher earnings for their
companies.
Profit EffectsManagers prefer to report higher earnings for their
companies.
Income Tax EffectsManagers prefer to pay the
least amount of taxes allowed by law as late as
possible.
Income Tax EffectsManagers prefer to pay the
least amount of taxes allowed by law as late as
possible.
LO 4
8-39
Copyright © 2011 McGraw-Hill Ryerson Limited
Valuation at Lower of Cost or Net Realizable Value
Ending inventory is reported at the lower of cost or net realizable value (LCNRV). Ending inventory is reported at the lower of cost or net realizable value (LCNRV).
Net Realizable Value (NRV)is the expected sales price less
estimated selling costs (e.g., repair and disposal costs).
Net Realizable Value (NRV)is the expected sales price less
estimated selling costs (e.g., repair and disposal costs).
The company will recognize a “holding” loss in the current period rather than the period in which the item is sold.
This practice is conservative.
The company will recognize a “holding” loss in the current period rather than the period in which the item is sold.
This practice is conservative.LO 5
8-40
Copyright © 2011 McGraw-Hill Ryerson Limited
Valuation at Lower of Cost or Net Realizable Value
Item Quantity Cost
Net Realizable
Value (NRV) LCNRV Total LCNRVIntel chips 1,000 250$ 200$ 200$ 200,000$ Disk drives 400 100 110 100 40,000
$ 290,000 $ 240,000
Item Quantity Cost
Net Realizable
Value (NRV) LCNRV Total LCNRVIntel chips 1,000 250$ 200$ 200$ 200,000$ Disk drives 400 100 110 100 40,000
$ 290,000 $ 240,000
(1,000 Intel chips × $50) = $50,000
LO 5
8-41
Copyright © 2011 McGraw-Hill Ryerson Limited
Inventory Turnover
Cost of Sales = Average Inventory
Inventory Turnover
Average Inventory is . . .(Beginning Inventory + Ending Inventory) ÷ 2
Average Inventory is . . .(Beginning Inventory + Ending Inventory) ÷ 2
This ratio reflects how many times average inventory was produced and sold during the period. A higher ratio indicates that inventory moves more
quickly thus reducing storage and obsolescence costs.
This ratio reflects how many times average inventory was produced and sold during the period. A higher ratio indicates that inventory moves more
quickly thus reducing storage and obsolescence costs.
LO 6
8-42
Copyright © 2011 McGraw-Hill Ryerson Limited
Inventory and Cash Flows
Add
Subtract
Cash Flows Cash Flows from from
OperationsOperations
Cash Flows Cash Flows from from
OperationsOperations
ProfitProfitProfitProfit
Decrease in InventoryDecrease in InventoryIncrease in Trade Increase in Trade
PayablesPayables
Decrease in InventoryDecrease in InventoryIncrease in Trade Increase in Trade
PayablesPayables
Increase in Inventory Increase in Inventory Decrease in Trade Decrease in Trade
PayablesPayables
Increase in Inventory Increase in Inventory Decrease in Trade Decrease in Trade
PayablesPayables
LO 6
8-43
Copyright © 2011 McGraw-Hill Ryerson Limited
Appendix 8A: Additional Issues in Measuring Purchases
Purchase returns and allowances are a reduction
in the cost of purchases associated with
unsatisfactory goods.
A purchase discount is a cash discount
received for prompt payment of an account.
Appendix 8A
8-44
Copyright © 2011 McGraw-Hill Ryerson Limited
Appendix 8B: Additional Issues in Measuring Purchases
Terms
Time
Due
Discount Period
Full amountless discount
Credit Period
Full amount due
Purchase or Sale
2/10,n/302/10,n/30Discount Percent
Discount Percent
Number of Days Discount
Is Available
Number of Days Discount
Is Available
CreditPeriod
CreditPeriod
Appendix 8A