Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question Report abuse Howard is trying to compute the inventory balance for the December 31, 2011, ?nancial state- ments of his automotive parts shop. He

Question

Report abuse

Howard is trying to compute the inventory balance for the December 31, 2011, ?nancial state- ments of his automotive parts shop. He has computed a tentative balance of $61,800 but suspects that several adjustments still need to be made. In particular, he believes that the following could affect his inventory balance:

a. A shipment of goods that cost $2,000 was received on December 28, 2011. It was prop- erly recorded as a purchase in 2011 but not counted with the ending inventory.

b. Another shipment of goods (FOB destination) was received on January 2, 2012, and cost $1,200. It was properly recorded as a purchase in 2012 but was counted with 2011s ending inventory.

c. A $3,400 shipment of goods to a customer on January 3 was recorded as a sale in 2012 but was not included in the December 31, 2011, ending inventory balance. The goods cost $2,300. d. The company had goods costing $8,000 on consignment with a customer, and $6,000 of merchandise was on consignment from a vendor. Neither amount was included in the $61,800 ?gure.

e. The following amounts represent merchandise that was in transit on December 31, 2011, and recorded as purchases and sales in 2011 but not included in the December 31 inventory.

1. Ordered by Howard, $2,600, FOB destination 2. Ordered by Howard, $900, FOB shipping point 3. Sold by Howard, cost $3,400, FOB shipping point 4. Sold by Howard, cost $5,100, FOB destination

Required:

1. Determine the correct amount of ending inventory at December 31, 2011. 2. Assuming net purchases (before any adjustment, if any) totaled $79,200 and beginning inventory (January 1, 2011) totaled $38,700, determine the cost of goods sold in 2011.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Statement Analysis

Authors: K. R. Subramanyam, John J. Wild

10th edition

73379433, 73379432, 978-0073379432

More Books

Students also viewed these Accounting questions

Question

7. One or other combination of 16.

Answered: 1 week ago