Question

Seemore Lens Company (SLC) sells contact lenses FOB destination. For the year ended December 31, the company reported Inventory of $71,000 and Cost of Goods Sold of $422,000. a.Included in Inventory (and Accounts Payable) are $10,200 of lenses SLC is holding on consignment. b.Included in SLC’s Inventory balance are $5,100 of office supplies held in SLC’s warehouse. c.Excluded from SLC’s Inventory balance are $8,100 of lenses in the warehouse, ready to send to customers on January 2. SLC reported these lenses as sold on December 31, at a price of $15,200. d.Included in SLC’s Inventory balance are $3,050 of lenses that were damaged in December and will be scrapped in January, with zero realizable value. Required: For each item, (a)-(d), prepare the journal entry to correct the balances presently reported

Answer 1

	Debit	Credit
Cost of Goods Sold	$ 10,250.00
Inventory		$ 10,250.00

Workings

	Inventory	Cost of Goods Sold
Beginning Balances before Adjustments Below	$   71,000.00	$                 422,000.00
Held on Consignment	$ (10,200.00)	$                   10,200.00
Office Supplies	$   (5,100.00)	$                      5,100.00
Inventory Sold on January 2	$      8,100.00	$                   (8,100.00)
Scrap Inventory	$   (3,050.00)	$                      3,050.00
Total Adjustment	$ (10,250.00)	$                   10,250.00
Adjusted Balances After Adjustments	$   60,750.00	$                 432,250.00