Week 6 — Merchandising Operations
Why this matters
Whether you stock the floor of a bicycle shop, order textbooks for a campus bookstore, or buy ingredients for a food truck, you need to know what your goods really cost and how much of each sale is left after that cost.
In plain language
Some businesses sell work, and some sell goods they bought from someone else. This week the bicycle shop starts selling bicycles, so it becomes a merchandising business (a business that buys goods and resells them). You will learn to record what the goods cost, including the freight and any discount, and to record each sale twice: once for the price and once for the cost. The difference between the two is gross profit (what the goods earned before the costs of running the shop). You will see where gross profit sits on an income statement and why it is not the same as net income.
- Already covered: Week 5's statements and closing entries.
- This week: purchases, freight, discounts, sales, and gross profit.
- How they connect: each purchase and sale is a balanced entry.
- Where we're going next: Week 7, Inventory Costing.
Focus
When a business buys goods and resells them, what did the goods really cost, and how much of each sale is left after that cost?
By the end of this module, you should be able to:
- [ ] tell a perpetual inventory system from a periodic one
- [ ] record a purchase, its freight, and a purchase discount
- [ ] record a sale with its cost of goods sold
- [ ] compute gross profit and lay out a multi-step income statement
To-do
Plan your week
- Read Chapter 6 (~35–45 minutes), then the lecture and slides.
- Work the lecture tutorial (60–90 minutes).
- Do the practice set (15–25 minutes).
- Do the Accounting Workshop (about 90 minutes), the discussion, and the assignment.
- Take the quiz.
This week's checkpoint: record the bicycle shop's purchase and sale and find its gross profit.
You've got this
Take it in order, and ask your instructor if a step snags.
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