Question

In: Accounting

On December 31, 2019, of the current year Smith Enterprises physically counted $1,500,000 of inventory. The...

On December 31, 2019, of the current year Smith Enterprises physically counted $1,500,000 of inventory. The following additional information is also available:

  1. Smith Enterprises sold goods for $250,000 to Julia Corp. Smith Enterprises had originally purchased the goods for $175,000. The order was shipped to Julia FOB shipping point on December 28, 2019 and arrived at Julia's facility on January 2, 2020.
  1. Smith purchased goods costing $40,000 from vendor Lemon Drop Company. Lemon Drop shipped the goods to Smith FOB shipping point on December 29, 2019 and the order was delivered on January 1, 2020 The shipment was a rush order that was supposed to arrive by December 31.
  1. Smith sold goods for $250,000 to Nash Company. Smith had originally purchased the goods for $175,000. The order was shipped to Nash, FOB Destination on December 28, 2019 and arrived at Nash's facility on January 4, 2020.
  1. Smith purchased goods costing $30,000 from vendor Razzles Company. Razzles shipped the goods to Smith FOB destination on December 30, 2019 and the order was delivered on January 3, 2020.

Question 1: For letter A, does Smith adjust or not adjust the physical count for the in-transit goods? Explain.

Question 2: For letter B, does Smith adjust or not adjust the physical count for the in-transit goods? Explain.

Question 3: For letter C, does Smith adjust or not adjust the physical count for the in-transit goods? Explain.

Question 4: For letter D, does Smith adjust or not adjust the physical count for the in-transit goods? Explain.

Question 5a: Consider the in-transit items described above and further assume that Smith’s general ledger reports a Merchandise Inventory balance at 12/31/2019 of $1,750,000. What adjusting entry should Smith prepare at 12/31/2019 to record this inventory shrink? (Make sure to provide the calculations for the number you use in your journal entry!)

Date: MM/DD/YY

Dr. Account………...XX

            Cr. Account…………...XX

Question 5b: Consider your entry in 5a, what could have caused this shrink?

Solutions

Expert Solution


Related Solutions

On December 31, 2019, of the current year Company A physically counted $1,500,000 of inventory. The...
On December 31, 2019, of the current year Company A physically counted $1,500,000 of inventory. The following additional information is also available: Company A sold goods for $250,000 to Dog Enterprise. Company A had originally purchased the goods for $175,000. The order was shipped to Dog Enterprise FOB shipping point on December 28, 2019 and arrived at Dog Enterprise facility on January 2, 2020. Question 1: Does Company A adjust or not adjust the physical count for the in-transit goods?...
The merchandise inventory in Ivanhoe Company was counted after the close of business on December 31,...
The merchandise inventory in Ivanhoe Company was counted after the close of business on December 31, 2021, the company’s year end. It was determined that the total cost of this inventory was $51,200. Ivanhoe wants to know if this is the correct amount that should be reported on the company’s December 31, 2021, balance sheet or if an adjustment needs to be made for any of the following items: (a) The count included items costing $1,200 that had been sold...
1) A retail furniture dealer counted the following goods in inventory on December 31. An accountant...
1) A retail furniture dealer counted the following goods in inventory on December 31. An accountant recommended that the inventory items be valued at the lower of cost or market price. Compute the total value of the inventory based on the lower of cost or market price. If required, round your answers to two decimal places. Article Quantity Unit Cost Price Extension at Cost Unit Market Price Extension at Market Inventory Value at Lower of Cost or Market Armchairs, wood...
The Concord Company counted physically their beginning balance on January 02, 2020 and subsequent inventory purchases...
The Concord Company counted physically their beginning balance on January 02, 2020 and subsequent inventory purchases made by the company during the month of January 2020 are given below: Date Description Units   Rate Jan. 02 Beginning Inventory 300 $10 Jan. 11 Purchased 600 12    Jan 23 Purchased 700 11 The company sold 1,300 units during the month of January 2020. Instructions: The company uses periodic inventory system. Compute the cost of goods sold and ending inventory on January 31,...
Celebrity Inc. has the following shares outstanding at December 31, 2019: Common shares, $1,500,000 no par...
Celebrity Inc. has the following shares outstanding at December 31, 2019: Common shares, $1,500,000 no par value, 10,000 shares issued and outstanding, unlimited number authorized. Preferred shares, $200,000, $5.00, no par value, non voting shares, 2,000 shares issued and outstanding. The preferred shares are cumulative and non-participating.    Dividends have not been declared for the past two years.    Dividends declared are $30,000. What is the total common share dividends?
Accounting: Celebrity Inc. has the following shares outstanding at December 31, 2019: Common shares, $1,500,000 no...
Accounting: Celebrity Inc. has the following shares outstanding at December 31, 2019: Common shares, $1,500,000 no par value, 10,000 shares issued and outstanding, unlimited number authorized. Preferred shares, $200,000, $5.00, no par value, non voting shares, 2,000 shares issued and outstanding. The preferred shares are noncumulative and non-participating.    Dividends declared are $47,500. What is the total preferred share dividends? Celebrity Inc. has the following shares outstanding at December 31, 2019: Common shares, $1,500,000 no par value, 10,000 shares issued...
During the taking of its physical inventory on December 31, 20Y3, Kate's Interiors Company incorrectly counted...
During the taking of its physical inventory on December 31, 20Y3, Kate's Interiors Company incorrectly counted its inventory as $123,800 instead of the correct amount of $132,465. Indicate the effect of the misstatement on Kate's Interiors's December 31, 20Y3, balance sheet or income statement for the year ended December 31, 20Y3. For each, select if the amount is overstated or understated. Then, input the over or under amount, entered as a positive value. Cost of goods sold Current assets Gross...
Problem #1 Facts: (Question 1 - Question 5) On December 31, 2019, of the current year...
Problem #1 Facts: (Question 1 - Question 5) On December 31, 2019, of the current year Smith Enterprises physically counted $1,500,000 of inventory. The following additional information is also available: Smith Enterprises sold goods for $250,000 to Julia Corp. Smith Enterprises had originally purchased the goods for $175,000. The order was shipped to Julia FOB shipping point on December 28, 2019 and arrived at Julia's facility on January 2, 2020. Smith purchased goods costing $40,000 from vendor Lemon Drop Company....
Mango Stores financial year ends on 31 December each year. On 31 December 2019, the owner...
Mango Stores financial year ends on 31 December each year. On 31 December 2019, the owner of Mango Stores needed the financial statements in order to see how the entity has performed during the current financial year. Unfortunately, the bookkeeper of Mango Stores was sick and was not able to prepare the financial statements. The following list of accounts balance was provided to you by the bookkeeper as at 31 December 2019. Mango Stores Trial Balance as at 31 December...
Chaos Manufacturing had the following financial information for the year ended December 31 2019: Inventory Balances:               ...
Chaos Manufacturing had the following financial information for the year ended December 31 2019: Inventory Balances:                Beginning                    Ending Work in Progress                    $ 90,000                      $ 80,000 Finished Goods                       $ 77,000                      $ 67,000 Raw Materials                        $ 10,000                      $ 10,000 During the year, the budgeted and actual costs were as follows: Note Budget Actual Raw Materials 1       300,000      290,000 Labour 2       540,000      518,000 Depreciation Factory Equipment        72,000         72,000 Depreciation Office Equipment         24,000   ...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT