Merchandise Inventory

The inventory of a merchandising entity consist of goods purchased for resale. For a grocery store, inventory would be made up of meats, vegetables, canned goods, soft drinks and others items. For a lumber hardware it would be plywood, paints, nails, iron sheets, cements, tools, and other items. Merchandising entities purchased their inventories from manufacturers, wholesalers, and other suppliers.

The merchandise inventory at the beginning of the accounting period is called beginning inventory. Conversely, the merchandise inventory at the accounting period is called ending inventory. Beginning and ending inventories are used in calculating cost of good sold in the income statement. The ending inventory shown in the income statement will be the the merchandise inventory to be reported in  the balance sheet. Effectively, the ending inventory of the current period will be the beginning inventory of the next period.

Game plan Marketing Solution Inc

Partial Income Statement

For the Year ended Dec 31, 2011

Cost of Good Sold

Merchandise inventory beginning Jan. 01 2011                                          528,000.00

Add:

Purchased                                                                    790,000.00

Transportation In                                                            80,000.00             870,000.00

Goods Available for sale                                                                      1,398,000.00 

Less: Ending Inventory Dec. 31 2011                                                        990,000.00

Cost of Good Sold                                                                                   408,000.00