Lehigh Inc. uses a periodic inventory system and the balance sheet approach to estimate uncollectibles. Lehigh Inc.'s sales revenue comes from both sales of inventory and revenue from long term construction projects. Lehigh Inc. records revenue for inventory sales when legal title of inventory is transferred to customers, at delivery. The firm has a 90-day return policy for inventory. Lehigh Inc. records revenue for long term construction projects over time in proportion to progress towards completion (based on the ratio of costs incurred to date and total expected costs). All sales are credit sales and all purchases are credit purchases. Lehigh Inc. prepares the operating section of the statement of cash flows using the direct method. The company's ending inventory on December 31, 2021, its fiscal-year end, based on a physical count, was determined to be $142,000. Lehigh Inc.'s unadjusted trial balance also showed the following account balances: Purchases, net $450,000. Lehigh Inc. uses a periodic inventory system and records purchase and sales discounts using the net method. Any discount not taken is recorded as part of other expenses. NR are all issued in exchange for merchandise sold and NP in exchange for inventory purchased. Part A: The internal audit department discovered the following items relating to purchases and sales of inventory and asked for your help with correcting errors (if needed): 1. Goods that cost $15,000 held on consignment for Dix Company were recorded as a purchase in 2021 when the inventory was received from Dix. Lehigh Inc. did not sell any of the inventory to end customers by the end of 2021 . 2. Goods that cost $41,000 were shipped from a vendor on December 28,2021 , terms f.o.b. shipping point. The merchandise arrived on January 3, 2022. The purchase and related accounts payable were recorded in 2022. 3. Goods shipped to a customer f.o.b. destination on December 25,2021 , were received by the customer on January 4,2022 . The sales price was $40,000 and the merchandise cost $26,000. The sale and corresponding accounts receivable were recorded in 2021. 4. Goods shipped from a vendor f.o.b. shipping point on December 27, 2021, were received on January 3, 2022. The merchandise costs $24,000. The purchase was recorded in 2022. 5. The 2020 balance sheet reported inventory of $145,000. The internal auditors discovered that a mathematical error caused this inventory to be overstated by $15,000. This amount is considered material. Comparative financial statements will be issued. 6. Goods that cost $30,000 were shipped from a vendor on December 28, 2021, terms f.o.b. destination. The merchandise arrived on December 29,2021 . The purchase and related accounts payable were recorded in 2022. 7. On December 24, 2021 Lehigh Inc. sold Deed Inc. merchandise with a cost of $2,500 for $3,000. Because of a shipping backlog, Lehigh Inc. held the inventory until January. Lehigh Inc. recorded the revenue on Dec 24, 2021. Part B: The following events/transactions were not recorded: 8. On Feb 10, 2021 Lehigh Inc. purchased inventory for $10,000, with terms 3/10,n/30. The company uses the net method to record purchases. The purchase was paid for on Feb 28. Record both the purchase and payment. 9. Lehigh Inc. acquired inventory from the supplier on 6/30/2021 and gave a noninterest-bearing note in exchange. Lehigh Inc. is obligated to pay $55,000 on 6/30/2022 to satisfy the obligation in full. Lehigh Inc. should recognize accrued interest expense of $1,500 on the note in its 2021 yearend financial statements, but did not record the purchase of inventory. Do not forget to record interest expense at the end of the period. 10. Lehigh Inc. accepted a 10 -month noninterest-bearing note with a face value of $6,000 on March 31,2021 . The note was accepted as payment for merchandise with a fair value of $5,200. The effective interest rate for similar notes is 7%. Do not forget to record the related interest at the end of the period. 11. On November 10 of the current year, Lehigh Inc. sold inventory to a customer for $8,000 with credit terms 2/10,n/30. Lehigh Inc. used the net method of accounting for sales discounts. The customer paid on December 10 . 12. On October 1, 2021, Lehigh Inc. exchanged investments with a BV of $21,000 for a non-interest notes receivable of 20,000 due October 1,2023 . The fair value of the investments was $17,000 at the time of sale. (Note that you will have both a discount and a gain/loss on sale of investment). 13. On March 31, 2021, Lehigh Inc. discounted a $30,000,10% notes receivable at Cloverdale Bank. The notes receivable was issued in exchange for inventory on Sept 30,2020 and sales revenue was credited. The note receivable is due on June 30,2021 . The bank's discount rate is 12%. 14. Lehigh Inc. measures its inventories using FIFO. At the end of 2021, the selling price of its inventory is $240,000 and the selling costs are 5% of selling price. The replacement cost for inventory is $230,000 and Lehigh Inc.'s normal profit margin is 12% of selling price. Inventory impairments are usual for the industry. 15. On Nov 1, 2020, Lehigh Jeans sold merchandise to ABC in exchange for a 4 year $50,000,9% notes receivable. Interest payments are due each Nov 1 every year and principal is due on Nov 1 , 2024. The firm recorded all journal entries related to this receivable in 2020. As ABC is experiencing financial difficulties, it was not able to pay interest on Nov 1, 2021. The note terms were re-negotiated on Nov 2, 2021 as follows: Lehigh Jeans agreed to reduce the interest payment due in 2021 to 2,000 , reduce the interest rate for future interest payments to 6% of the original notes receivable, delay all interest payments (other than the $2,000 late payment, which is due on Nov 2, 2021) until the principal is due and to reduce the principal due to $40,000. Provide all journal entries related to this receivable in 2021 (hint: do not forget to accrue interest on Dec 31). 16. On Feb 1, Lehigh purchased a 3-acre tract of land for a building site for $350,000. The company demolished the old building at a cost of $12,000, but was able to sell scrap from the building for $1,500. The cost of title transfer was $900 and attorney fees for reviewing the contract was $500. Property taxes paid were $2,750, covering the period before the purchase date. 17. On July 1, 2021, Lehigh acquired equipment. Lehigh paid $160,000 in cash on July 1, 2021, and signed a $140,000 noninterest-bearing note for the remaining balance which is due on July 1 , 2023. An interest rate of 12% reflects the time value of money for this type of loan agreement (record the purchase on July 1 and the accrued interest expense on Dec 31). 18. Lehigh exchanged equipment and $18,000 cash for similar equipment. The book value and the fair value of the old equipment were $82,000 and $90,000, respectively. The old equipment had accumulated depreciation of $18,000. Assume that the exchange has commercial substance. 19. Lehigh exchanged land and cash of $5,000 for similar land. The book value and the fair value of the land were $90,000 and $100,000, respectively. Assume that the exchange has commercial substance. 20. In 2018, Lehigh acquired Glynco and recorded goodwill of $10,000. Lehigh considers Glynco a separate reporting unit. By the end of 2021 , the net assets (including goodwill) of Glynco are $32,000 and its estimated fair value is $26,000. 21. During the month of October 2021, Lehigh Jeans ran a promotion and offered a coupon for 30% off a future purchase of one pair of jeans with the purchase of one pair of jeans (customers that purchased multiple pairs of jeans received multiple coupons, however coupons cannot be combined). Lehigh Jeans sold 150 pairs of jeans for $50 each and provided 15030% off coupons. Historically, 60% of the coupons have been redeemed. By December, 40 customers used coupons. a) Determine the correct amounts for 2021 ending inventory and purchases (this will help you find EB of inventory and any possible impairments. Use the following table