I can't tell you how relieved I am when searching a topic, and I see you have an offering on the subject. Always informative, and more importantly, understandable. Thanks so much!
Because the computation is for COGS. Which means you are going to calculate the cost of the goods that are going to be sold. Since the $5 is the amount you incurred when you purchased the item therefore, it is also the cost used to calculate COGS. On the other hand, $12 is a price set by your company for sale purposes and to earn profit so, it has nothing to do with the COGS computation.
hello thank you for sharing this awesome video. but i have a question here, in your example inventory value is $4000 and COGS value is 3750, because the sell is smaller (only 750 units) than the purchase (800 units), how if the sell is bigger (lets say 820 units), then the COGS value must be $4100 in perpetual method, which is bigger than inventory. if that happen, how do i get the COGS value with periodic method, and how do i make it balance with the purchase value?
This is a good question. It would depend on the inventory method that you are using (FIFO, LIFO, Average Cost). Here are some videos that I have on these inventory methods: LIFO: ruclips.net/video/zLAvpS6o25E/видео.html FIFO: ruclips.net/video/Wa83L8TvoaM/видео.html Average Cost: ruclips.net/video/qAWVVw-dC5A/видео.html Thanks for watching!
In periodic method, you only debit $250 in inventory, whereas there's suppose to be $500 in the ending inventory. But in perpetual inventory you have an ending inventory of $500. How would we justify the balance $250 in the periodic method in inventory?
In both methods, your ending inventory is $500. For periodic, the beginning inventory was $250. In the very last journal entry, we add $250 to inventory. Thus, if you were to do a T-account the total inventory would be $500 at the end of the month. This video was intended to compare the 2 methods. I have more detailed videos below for each method in case you need it. Best of luck in your studies! Perpetual Inventory: ruclips.net/video/30BoifG_904/видео.html Periodic Inventory: ruclips.net/video/zuY-2w0k1BI/видео.html
Thank you Joel. me too I was looking for periodic beginning inventory . Some people they don't ask. If they understood 70% they are satisfied, Accounting is not their Major. When your Accounting is your Major you want to understand it 100%. Good Question.
Please help me please answer 1.purchase 2.purchase returns & allowance 3.Purchase discount 4.Freight in Is there anything else which goes to Merchandise Inventory account???
I'm having trouble understanding. so if you sell 750 units at 12 and it equals 9000. but how and why did you get 3750? by multiplying 750×5=3750. why was this step taken? thanks!
How do you account for losses that aren't recorded such as theft or breakage? If your periodic count at the end for example is a lesser amount than how the math should work out... how does this work?
It’s not right say the purchase account is not a real account. It is an real account. You need to be more clear as to whether it’s a balance sheet or PL account. Example, if you don’t count your inventory until end of Q1. There is an amount in the purchase account for Jan and Feb. Is the amount on the BS or PL
In this video I explain FIFO, LIFO and average cost methods to value the stocks stored by a company, to estimate the cost of goods sold and to determine the commercial result (profit or loss) of the firm: ruclips.net/video/mOM1Lqqydos/видео.html.
![Perpetual Inventory Accounting [WITH FULL EXAMPLE]](http://i.ytimg.com/vi/FZG8KphYOZ0/mqdefault.jpg)
I can't tell you how relieved I am when searching a topic, and I see you have an offering on the subject. Always informative, and more importantly, understandable. Thanks so much!
Thank you for the kind words my friend! I always enjoy seeing your thumbnail photo :)
I know im not the only one who quickly subscribed after seeing how this guy has made everything so easy
I've watched so many of your videos now and they've helped immensely!! You're an amazing teacher!!
I really love the way you deliver the knowledge because you are good at expressing what's on your brain. my professors are not good at it.
Thanks!
This video is very useful because we can learn how to do inventory and what is it about.
Great. I'm glad you found this useful!
This channel got me through my accounting degree
wow.! This video make so much sense. Why professor can't teach in this way!! Only lecture from book.
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Wow. Thanks so much for this boost of confidence! Take Care.
I should have picked this video first. totally understand now thank you
watching this for my accounting class, thank you
I am so happy at last i could find a very understandable video on this topic very useful, keep on the good work
You have helped me in such a critical time. Thank you sir so much
Life saver
Man you made it sound so simple
Thank you so much for this video. You have no idea how much it helped!
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thank you so much. I'm from Malaysia
So periodic deals with time and perpetual deals with each sale.
Very clear and understandable.
i finally understand 😭 thank you so much
3:19 How come you multiplied the 750 units by $5/unit instead of the $12/unit?
Because the computation is for COGS. Which means you are going to calculate the cost of the goods that are going to be sold. Since the $5 is the amount you incurred when you purchased the item therefore, it is also the cost used to calculate COGS. On the other hand, $12 is a price set by your company for sale purposes and to earn profit so, it has nothing to do with the COGS computation.
You are a godsend!
Happy to help!
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hello thank you for sharing this awesome video. but i have a question here, in your example inventory value is $4000 and COGS value is 3750, because the sell is smaller (only 750 units) than the purchase (800 units), how if the sell is bigger (lets say 820 units), then the COGS value must be $4100 in perpetual method, which is bigger than inventory. if that happen, how do i get the COGS value with periodic method, and how do i make it balance with the purchase value?
Very helpful. Thank you!
Clear dude!
Thanks sir. you cleared my doubt.
i have an issue where i play clash royale all class so this helps a lot
thankyou so much it helped me a lot☺
That's great to hear!
thanks so much ,, very helpful ... One question ,, what if the purchases we made are at different rate than starting inventory ?
This is a good question. It would depend on the inventory method that you are using (FIFO, LIFO, Average Cost). Here are some videos that I have on these inventory methods:
LIFO: ruclips.net/video/zLAvpS6o25E/видео.html
FIFO: ruclips.net/video/Wa83L8TvoaM/видео.html
Average Cost: ruclips.net/video/qAWVVw-dC5A/видео.html
Thanks for watching!
In periodic method, you only debit $250 in inventory, whereas there's suppose to be $500 in the ending inventory. But in perpetual inventory you have an ending inventory of $500. How would we justify the balance $250 in the periodic method in inventory?
In both methods, your ending inventory is $500. For periodic, the beginning inventory was $250. In the very last journal entry, we add $250 to inventory. Thus, if you were to do a T-account the total inventory would be $500 at the end of the month. This video was intended to compare the 2 methods. I have more detailed videos below for each method in case you need it. Best of luck in your studies!
Perpetual Inventory: ruclips.net/video/30BoifG_904/видео.html
Periodic Inventory: ruclips.net/video/zuY-2w0k1BI/видео.html
Thank you very much for the explanation and wishes! I get it now. Your videos have been more than helpful. Thank you again.
Thank you Joel. me too I was looking for periodic beginning inventory . Some people they don't ask. If they understood 70% they are satisfied, Accounting is not their Major. When your Accounting is your Major you want to understand it 100%. Good Question.
Perpetual seems to make so much more sense and seems much more straightforward and organized. Why would a company even want to use periodic?
When ur doing like 1000 transactions in a period, it makes sense
Thank you so much this wassuch a huge help
Great video
thank you so much!
amazinggggggg explanation! :]
Thank you ☺
Btw how the income statement calculation? Is same both method??
Dear Edspira, your voice reminds me of Foodwishes here on youtube! Are you related? :)
Unfortunately not, but it's funny you should mention that. People have said I sound like Foodwishes and also the actor John C Reilly :)
thanks alot
Happy to help!
Thankyouuu!
No problem!
Please help me please answer
1.purchase 2.purchase returns & allowance 3.Purchase discount 4.Freight in Is there anything else which goes to Merchandise Inventory account???
Appreciate🙏
Tnk u that is all i can say
No problem!
I'm having trouble understanding. so if you sell 750 units at 12 and it equals 9000. but how and why did you get 3750? by multiplying 750×5=3750. why was this step taken? thanks!
elperrodelace u have to multiply the 750 units by how much u purchased them for instead of how much u sold it for
you rock!
Thank you!
What does A/R stand for?
Accounts Receivable
How do you account for losses that aren't recorded such as theft or breakage? If your periodic count at the end for example is a lesser amount than how the math should work out... how does this work?
A little off topic, but i really think you sound like cam from modern family
It’s not right say the purchase account is not a real account. It is an real account. You need to be more clear as to whether it’s a balance sheet or PL account. Example, if you don’t count your inventory until end of Q1. There is an amount in the purchase account for Jan and Feb. Is the amount on the BS or PL
Why did we multiple 750 with 5
Because each unit sold cost us 5 bucks to purchase
I like the Perpetual method lol
In this video I explain FIFO, LIFO and average cost methods to value the stocks stored by a company, to estimate the cost of goods sold and to determine the commercial result (profit or loss) of the firm: ruclips.net/video/mOM1Lqqydos/видео.html.
❣️