In: Accounting
Prepare any correcting entries to adjust inventory to its proper amount at December 31, 2014. Assume the books have not been closed.
Craig Company asks you to review its December 31, 2014,
inventory values and prepare the necessary adjustments to the
books. The following information is given to you.
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1) No entry is needed. Beggining physical inventory count balance = $299,250
2) No entry needed but an adjustment to physical inventory count = +$17,097
3) Adjustment entry need to match period
Sales Dr. $16,307
Accounts Receivable Cr. $16,307
(To record the reversal of sale recorded in December as it is received by the customer on Jan. 3)
Sales wiil be recorded in the month of january because inventory is sold on f.o.b. destination basis and it is received by customer on January 3.
No adjustment needed in inventory physical count.
4) Adjustment entry need to match period
Purchases (inventory) Dr. $19,913
Accounts Payable Cr. $19,913
(To record the inventory purchased as it is unrecorded on December 31)
No adjustment needed in inventory physical count.
5) No entry needed but an adjustment to physical inventory count = + $10,880
6) No entry needed. Adjustment to physical inventory count required as consignment is not held on inventory = - $13,298
7) No entry needed because inventory is sold on the f.o.b. shipping point basis.
Adjustment to physical inventory count required = - $13,402 (cost of inventory)
8) Adjustment entry
Sales returns and allowances Dr. $3,312
Accounts Receivables Cr. $3,312
(To record merchandise returned not recorded earlier)
Adjustment to physical inventory count required = - $1,911 (cost of inventory)
Proper inventory balance on December 31, 2014 = $299,250+$17,097+$10,880-$13,298-$13,402-$1,911
= $298,616