MERCHANDISING

MERCHANDISING• Derive its revenue principally from the resale of

merchandise it originally procures from suppliers. • Selling can be done either through retail or wholesale. • Referred to as a trading firm; as the term “trading” is

synonymous with “buy and sell”.

The buying and selling functions of a merchandise firm would necessarily include the following related activities:

Buying Merchandise:1. Purchase of merchandise either for cash or on

credit. ACCOUNT TITLE USED: PURCHASES Debit account

MERCHANDISING

Buying Merchandise:

2. Transporting merchandise from place of purchase to place of business. ACCOUNT TITLE USED:FREIGHT IN, CARTAGE IN or

DRAYAGE IN Debit account

Buying Merchandise:3. Returning of merchandise to the supplier ;

caused by either defects in the merchandise or a supplier ‘s error of delivering merchandise different from what was ordered. ACCOUNT TITLE USED: PURCHASE RETURNS

or PURCHASE ALLOWANCES. Credit account

Buying Merchandise:

4. Payment of accounts of suppliers. ACCOUNT TITLE USED: PURCHASE DISCOUNTS Credit account

Selling Merchandise:1. Selling to customers either for cash or on credit.

ACCOUNT TITLE USED: SALES Credit account

Selling Merchandise:

2. Transporting of merchandise bought by customers from place of buyer. ACCOUNT TITLE USED: FREIGHT OUT or DELIVERY

EXPENSE Debit account

Selling Merchandise:3. Accepting returns of previously sold

merchandise from customers; caused by either defects in the merchandise or error in delivering merchandise different from what were ordered. ACCOUNT TITLE USED: SALES RETURNS and

SALES ALLOWANCES. Debit account

Selling Merchandise:

4. Collection of accounts of customers. ACCOUNT TITLE USED: Sales Discounts Debit account

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