Refer to the information in E7-2.

Required:

For each item (a)–(d), prepare the journal entry to correct the balances presently reported. If a journal entry is not required, indicate so.

Data From E7-2

Seemore Lens Company (SLC) sells contact lenses FOB destination. For the year ended December 31, the company reported Inventory of $70,000 and Cost of Goods Sold of $420,000.

a. Included in Inventory (and Accounts Payable) are $10,000 of lenses SLC is holding on consignment.

b. Included in SLC’s Inventory balance are $5,000 of office supplies held in SLC’s warehouse.

c. Excluded from SLC’s Inventory balance are $8,000 of lenses in the warehouse, ready to send to customers on January 2. SLC reported these lenses as sold on December 31, at a price of $15,000.

d. Included in SLC’s Inventory balance are $3,000 of lenses that were damaged in December and will be scrapped in January, with zero realizable value.