In: Accounting
Solution:
Si No | Particulars | Inventory |
Accounts Payable |
Net Sales |
Initial Amounts (A) | $ 17,00,000 | $ 11,50,000 | $ 95,00,000 | |
Adjustments - Increase (Decrease) | ||||
a | Off-Site Work -in - Progress | $ 30,000 | ||
b | Excluded Invoice | $ 43,000 | ||
c | Goods Omitted From Count | $ 83,000 | ||
d | F.O.B Shipping Printing | -$ 35,000 | ||
e | F.O.B Destination | $ 40,000 | ||
f | Returned Goods | $ 27,000 | -$ 39,000 | |
Total Adjustments (B) | $ 1,80,000 | $ 43,000 | -$ 74,000 | |
Adjusted Amounts (A+B) | $ 18,80,000 | $ 11,93,000 | $ 94,26,000 |
A - Goods sent for Job Work should be included in Closing Inventory as Goods Sent on Job Work.
B - Goods were received before 31 Dec so it should be included in closing Inventory, as the same is already counted in Physical Count no need to adjust in Inventory. However Accounts Payable need to be increase as party bill is not booked.
C - Goods were received before 31 Dec so it should be included in closing Inventory, as the same is not counted in Physical Count so need to adjust in Inventory. However Accounts Payable is already updated so no need for further adjustments.
D – Goods lying at loading dock should be counted as inventory, as the same is already counted in Physical Count no need to adjust in Inventory. However the same is also recorded as sales so sales need to be reversed.
E – Goods tittle is not transferred as the same is in transit on 31 December and tittle will be transferred on receipt by the party as goods are sold on FOB destination basis. This should be included in inventory and sales should not be recorded until receipt by the party. Inventory should be adjusted to as these goods are not counted in physical count and there is no need to adjust sale as the same is booked on 3rd January.
F – Goods returned by customer before 31 December should be included in closing inventory at cost (i.e. $ 27000 ) and reduced from sales as sales return at invoice price (i.e. $ 39000).