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Griffin Shoe Company records Sales Returns and Allowances, Sales Discounts, and Credit Card Discounts as contra revenues July 12 Sold merchandise to customer at factory store who charged the $500 purchase on her American Express card. American Express charges a 1 percent credit card fee. Cost of goods sold was $375. July 15 Sold merchandise to Customer Tat an invoice price of $4,700; terms 2/10, n/30. Cost of goods sold was $2,35e. July 20 Collected cash due from Customer T. July 21 Before paying for the order, a customer returned shoes with an invoice price of $1,000; cost of goods sold was 5600 Complete the following table by entering the amounts of the effects of each transaction, including the related cost of goods sold (Indicate decreases with a minus sign.) Transaction Cost of Goods Sold 375 2,350 Net Sales 495 4,700 (94) (1,000) Gross Profit 120 2,350 July 12 July 15 July 20 July 21 (600) (400) Based on its physical count of inventory in its warehouse at year-end, December 31 of the current year, Plummer Company planned to report inventory of $33,600. During the audit the independent CPA developed the following additional information a. Goods from a supplier costing $740 are in transit with UPS on December 31 of the current year. The terms are FOB shipping point (explained in the "Required" section). Because these goods had not yet arrived, they were excluded from the physical Inventory count b. Plummer delivered samples costing $1.900 to a customer on December 27 of the current year, with the understanding that they would be returned to Plummer on January 15 of the next year. Because these goods were not on hand, they were excluded from the inventory count. c. On December 31 of the current year, goods in transit to customers, with terms FOB shipping point amounted to $6,900 (expected delivery date January 10 of the next year). Because the goods had been shipped, they were excluded from the physical inventory count d. On December 31 of the current year, goods in transit to customers, with terms FOB destination, amounted to $2,700 (expected delivery date January 10 of the next year). Because the goods had been shipped, they were excluded from the physical inventory count Required: Plummer's accounting policy requires including in inventory all goods for which it has title. Note that the point where title (ownership) changes hands is determined by the shipping terms in the sales contract. When goods are shipped "FOB shipping point,"title changes hands at shipment and the buyer normally pays for shipping. When they are shipped "FOB destination," title changes hands on delivery, and the seller normally pays for shipping Compute the correct amount for the ending inventory ("If no adjustment is necessary, enter a $0 in the cell."). Item Amount $ 33,600 Ending inventory (physical count on December 31 of the current year) a. Goods purchased and in transit b. Samples out on trial to customer c. Goods in transit to customer d. Goods in transit to customer Correct inventory, December 31, current year 2,700 38,940 $
