E8.5B (L0 2)

(Inventoriable Goods and CostsError Adjustments)

Wycliffe Company asks you to review its December 31, 2020, inventory values and prepare the necessary adjustments to the books. The following

information is given to you:

1. Wycliffe uses the periodic method of recording inventory. A physical count reveals $561,810 of inventory

on hand at December 31, 2020.

2. Not included in the physical count of inventory is $21,500 of merchandise purchased on December 20.

This merchandise was shipped f.o.b. destination on December 29 and arrived in January. The invoice arrived and was recorded on December 31.

3. Included in inventory is merchandise sold on December 30, f.o.b. destination. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale on account for $6,050 on December 31. The merchandise cost $5,120, and the customer received it on January 3.

4. Included in inventory was merchandise received on December 31 with an invoice price of $12,610. The merchandise was shipped f.o.b. shipping point. The invoice, which has not yet arrived, has not been recorded.

5. Not included in inventory is $6,525 of merchandise purchased from Sohio Industries. This merchandise was received on December 31 after the inventory had been counted. The invoice was received and recorded on December 30.

6 Included in inventory was $26,500 of inventory held by Wycliffe on consignment from Standard Industries.

7 Included in inventory is merchandise sold to Suland Corp. f.o.b. shipping point. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale for $7,800 on December 31. The cost of this merchandise was $6,100, and Suland received the merchandise on January 4.

8 Excluded from inventory was a carton labeled Please accept for credit. This carton contains merchandise costing $600 which had been sold to a customer for $1,100. No entry had been made to the books to reflect the return, but none of the returned merchandise seemed damaged.

Instructions

(a)Determine the proper inventory balance for Wycliffe Company at December 31, 2020.

(b)Prepare any necessary entries at December 31, 2020. Assume the books have not been closed.