Question

In: Accounting

Royal Corporation’s inventory at December 31, 2021, was $126,000 (at cost) based on a physical count...

Royal Corporation’s inventory at December 31, 2021, was $126,000 (at cost) based on a physical count of inventory on hand, before any necessary adjustment for the following:

  • Merchandise costing $16,000, shipped f.o.b. shipping point from a vendor on December 27, 2021, was received by Royal on January 5, 2022.
  • Merchandise costing $46,000 was shipped to a customer f.o.b. shipping point on December 28, 2021, arrived at the customer’s location on January 6, 2022.
  • Merchandise costing $22,000 was being held on hand for Jess Company on consignment (i.e., Royal is the consignee).
  • Estimated sales returns are 20% of annual sales. Sales revenue was $552,000 with a gross profit ratio of 30%.


What amount should Royal Corporation report as inventory in its December 31, 2021, balance sheet?

ultiple Choice

  • $197,280.

  • $181,280.

  • $227,280.

  • $225,405.

Solutions

Expert Solution

b. $181,280

reason:

inventory on 31st December,2021                                                         =$126,000

less; merchandise held for jess company as a consignment         =$22,000

add; sales return (20%of[ 552,000-30%of 552,000])                       =$77280

Inventory shown on balance sheet on 31st dec. 2021                     =181,280

Note;   merchandise costing$16000 is not received till 31st December and date of invoice is not relevant for inventory in hand system.

            Merchandise costing $46,000 is not shipped till 31st December that’s why included in the inventory on 31st December.

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

The December 31, 2021, inventory of Tog Company, based on a physical count, was determined to...
The December 31, 2021, inventory of Tog Company, based on a physical count, was determined to be $465,000. Included in that count was a shipment of goods received from a supplier at the end of the month that cost $65,000. The purchase was recorded and paid for in 2022. Another supplier shipment costing $27,500 was correctly recorded as a purchase in 2021. However, the merchandise, shipped FOB shipping point, was not received until 2022 and was incorrectly omitted from the...
The December 31, 2018, inventory of Tog Company, based on a physical count, was determined to...
The December 31, 2018, inventory of Tog Company, based on a physical count, was determined to be $460,000. Included in that count was a shipment of goods received from a supplier at the end of the month that cost $60,000. The purchase was recorded and paid for in 2019. Another supplier shipment costing $25,000 was correctly recorded as a purchase in 2018. However, the merchandise, shipped FOB shipping point, was not received until 2019 and was incorrectly omitted from the...
The December 31, 2018, inventory of Tog Company, based on a physical count, was determined to...
The December 31, 2018, inventory of Tog Company, based on a physical count, was determined to be $461,000. Included in that count was a shipment of goods received from a supplier at the end of the month that cost $61,000. The purchase was recorded and paid for in 2019. Another supplier shipment costing $25,500 was correctly recorded as a purchase in 2018. However, the merchandise, shipped FOB shipping point, was not received until 2019 and was incorrectly omitted from the...
The Kwok Company’s inventory balance on December 31, 2021, was $245,000 (based on a 12/31/2021 physical...
The Kwok Company’s inventory balance on December 31, 2021, was $245,000 (based on a 12/31/2021 physical count) before considering the following transactions: Goods shipped to Kwok f.o.b. destination on December 20, 2021, were received on January 4, 2022. The invoice cost was $46,000. Goods shipped to Kwok f.o.b. shipping point on December 28, 2021, were received on January 5, 2022. The invoice cost was $33,000. Goods shipped from Kwok to a customer f.o.b. destination on December 27, 2021, were received...
The Mateo Corporation's inventory at December 31, 2020, was $325,000 based on a physical count priced...
The Mateo Corporation's inventory at December 31, 2020, was $325,000 based on a physical count priced at cost, and before any necessary adjustment for the following: Merchandise costing $30,000, shipped F.o.b. shipping point from a vendor on December 30, 2020, was received on January 5, 2021. Merchandise costing $22,000, shipped F.o.b. destination from a vendor on December 28, 2020, was received on January 3, 2021. Merchandise costing $38,000 was shipped to a customer F.o.b. destination on December 28, 2020, arrived...
Grass Company’s inventory at December 31, 2021 was P570,000 based on a physical count of goods priced at cost and before any necessary year-end adjustments relating to the following:
Grass Company’s inventory at December 31, 2021 was P570,000 based on a physical count of goods priced at cost and before any necessary year-end adjustments relating to the following: • Included in the physical count were goods billed to a customer FOB shipping point on December 31, 2p016. These goods had a cost of P15,000 and were picked up by a carrier on January 10, 2022. • Goods shipped FOB shipping point on December 28, 2021 from a vendor to...
The Sheffield Company has just completed a physical inventory count at year end, December 31, 2022....
The Sheffield Company has just completed a physical inventory count at year end, December 31, 2022. Only the items on the shelves, in storage, and in the receiving area were counted and costed on the FIFO basis. The inventory amounted to $75,500. During the audit, the independent CPA discovered the following additional information: (a) There were goods in transit on December 31, 2022, from a supplier with terms FOB destination, costing $10,500. Because the goods had not arrived, they were...
he Monty Company has just completed a physical inventory count at year end, December 31, 2022....
he Monty Company has just completed a physical inventory count at year end, December 31, 2022. Only the items on the shelves, in storage, and in the receiving area were counted and costed on the FIFO basis. The inventory amounted to $81,600. During the audit, the independent CPA discovered the following additional information: (a) There were goods in transit on December 31, 2022, from a supplier with terms FOB destination, costing $9,800. Because the goods had not arrived, they were...
The Kwok Company’s inventory balance on December 31, 2016, was $165,000 (based on a 12/31/16 physical...
The Kwok Company’s inventory balance on December 31, 2016, was $165,000 (based on a 12/31/16 physical count) before considering the following transactions: 1. Goods shipped to Kwok f.o.b. destination on December 20, 2016, were received on January 4, 2017. The invoice cost was $30,000. 2. Goods shipped to Kwok f.o.b. shipping point on December 28, 2016, were received on January 5, 2017. The invoice cost was $17,000. 3. Goods shipped from Kwok to a customer f.o.b. destination on December 27,...
The Kwok Company's inventory balance on December 31, 2013, was $190,000 (based on a 12/31/13 physical...
The Kwok Company's inventory balance on December 31, 2013, was $190,000 (based on a 12/31/13 physical count) before considering the following transactions: 1. Goods shipped to Kwok f.o.b. destination on December 20, 2013, were received on January 4, 2014. The invoice cost was $35,000. 2. Goods shipped to Kwok f.o.b. shipping point on December 28, 2013, were received on January 5, 2014. The invoice cost was $22,000. 3. Goods shipped from Kwok to a customer f.o.b. destination on December 27,...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT