State the steps of Merchandise inventory
1) TRANSFER THE BEGINNING INVENTORY FIGURE
Debit INCOME SUMMARY for beginning inventory amount.
Credit MERCHANDISE INVENTORY for beginning inventory amount.
2) RECORD THE ENDING INVENTORY
Debit MERCHANDISE INVENTORY for ending inventory amount.
Credit INCOME SUMMARY for ending inventory amount.
This is preferred so that both inventory amounts show on Income Statement.
3) ADJUSTMENT FOR STORE SUPPLIES USED
Debit STORE SUPPLIES EXPENSE for the amount USED.
Credit STORE SUPPLIES
4) ADJUSTMENT FOR OFFICE SUPPLIES USED
Debit OFFICE SUPPLIES EXPENSE for the amount USED.
Credit OFFICE SUPPLIES.
5) ADJUSTMENT FOR INSURANCE EXPIRED
Debit INSURANCE EXPENSE for the amount of insurance that has expired.
Credit PREPAID INSURANCE (asset)
6) ADJUSTMENT FOR DEPRECIATION EXPENSE
Debit DEPRECIATION EXPENSE-TRUCK, CAR, EQUIPMENT, ETC.
Credit ACCUMULATED DEPRECIATION-TRUCK, CAR, EQUIPMENT, ETC.
7) ADJUSTMENT FOR SALARIES OWED BUT UNPAID
Debit SALARIES EXPENSE (could be SALES, OFFICE, etc.)
Credit SALARIES PAYABLE