Problem 3-30

ADJUSTMENTS TO CORRECT INVENTORY AND RELATED ACCOUNTS

The following transactions occurred a few days before and after Leopard Company's fiscal year which ends October 31. The company use periodic inventory system.

a.An invoice for P75,000, terms FOB shipping point, was receive ^ entered November 2. The invoice shows that the material was shipped October 31, but the receiving report indicates receipt of goods on November 3.

b. An invoice for P162,000, terms FOB destination, was received and entered October 25. The receiving report indicates that the goods were received October 30.

c. An invoice for P147,000, terms FOB shipping point, was received October 14 but never entered. Attached to it is a receiving report indicating that the goods were received October 19. Across the face of the receiving report is the following notation: "Merchandise not of same quality as ordered - returned for credit October 20."

d. An invoice for PI 14,000, terms FOB shipping point, was received and entered October 28. The receiving report attached to the invoice indicates that the shipment was received October 28 in satisfactory condition.

e. An invoice for P42,600, terms FOB shipping point, was received and recorded November 3. The receiving report indicates that the merchandise was received October 31.

You are instructed to review these transactions and to determine whether any correcting entries are to be prepared and whether the inventory per physical count on October 31 should be adjusted.

1-. What are the adjusting journal entries at October 31? Assume that me books have not been closed.

2. What is the net adjustment to Leopard's inventory as determined by Physical count on October 31?

a. P75, 000 increase c. P33,000 decrease

b. P90,000 increased.P72,000 decrease

What are the journal entries at October 31, and the net adjustment to Leopard's inventory as determined by Physical count on October 31?