Question

In: Accounting

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, 2013, were received by the customer on January 3, 2014. The sales price was $45,000 and the merchandise cost $27,000.
4.

Goods shipped from Kwok to a customer f.o.b. destination on December 26, 2013, were received by the customer on December 30, 2013. The sales price was $25,000 and the merchandise cost $18,000.
5.

Goods shipped from Kwok to a customer f.o.b. shipping point on December 28, 2013, were received by the customer on January 4, 2014. The sales price was $30,000 and the merchandise cost $17,000.
Required:
Determine the correct inventory amount to be reported in Kwok's 2013 balance sheet.

Solutions

Expert Solution

Solution:-

Statement showing correct inventory value
Particulars Amount
Inventory balance before additional transactions $ 190,000
Add:
Goods shipped F.O.B. shipping point, 12/28 22,000
Goods shipped F.O.B. destination, 12/27 27,000
Correct inventory balance $ 239,000

Explanation:-

Sr. No. Explanation
1 Goods of $35,000 shipped to Kwok F.O.B. destination that were received on January 4, 2014 should be excluded from 2013 inventory.
2 Goods of $22,000 shipped to Kwok F.O.B. shipping point on December 28, 2013 should be included in the 2013 inventory.  The date the inventory was received by Kwok is irrelevant
3 Goods of $27,000 shipped from Kwok to a customer F.O.B. destination on December 27, 2013 and received by customer on January 3, 2014 should be included in the 2013 inventory.
4 Goods of $18,000 shipped from Kwok to a customer F.O.B. destination on December 26, 2013 and received by customer on December 30, 2013 should be excluded from the 2013 inventory.
5 Goods of $17,000 shipped from Kwok to a customer F.O.B. shipping point on December 28, 2013 should be excluded from the 2013 inventory.  The date received by the customer is irrelevant.

Please Rate or comment if you have any doubt regarding this solution.

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

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, 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 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, 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 $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...
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...
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...
Boatwig, Corp. Balance Sheet December 31, 2013 and December 31, 2014 2013 Dr. Cr. 2014 Assets...
Boatwig, Corp. Balance Sheet December 31, 2013 and December 31, 2014 2013 Dr. Cr. 2014 Assets Cash $19,000 $71,000 Accounts Receivable                 66,000                 84,000 Inventory               185,000               184,000 Land               113,000                 67,000 Equipment               195,000               256,000 Accummulated Depreciation                (42,000)                (69,000) Total $536,000 $593,000 Liabilities and Stockholders' Equity Accounts Payable $44,000 $36,000 Bonds Payable               198,000               143,000 Common Stock               167,000               222,000 Retained Earnings               127,000               192,000 Total $536,000                         -                          ...
The unadjusted inventory balance of Ultim Corp. is $100,000 on December 31, 2020, based on a...
The unadjusted inventory balance of Ultim Corp. is $100,000 on December 31, 2020, based on a physical inventory count. The following items must be considered before the inventory valuation is finalized. a. On December 31, the physical inventory excluded $250 of merchandise inventory set aside for shipment to a customer, which has not yet shipped. b. On December 31, the physical inventory excluded $1,000 of merchandise inventory out on consignment in the customers’ showrooms. c. On December 31, the physical...
The Rainbow Company’s income statement and comparative balance sheets as of December 31 of 2013 and...
The Rainbow Company’s income statement and comparative balance sheets as of December 31 of 2013 and 2012 follow: RAINBOW COMPANY Income Statement For the Year Ended December 31, 2013 Sales Revenue $750,000 Dividend Income 15,000 765,000 Cost of Goods Sold $440,000 Wages and Other Operating Expenses 130,000 Depreciation Expense 39,000 Patent Amortization Expense 7,000 Interest Expense 13,000 Income Tax Expense 44,000 Loss on Sale of Equipment 5,000 Gain on Sale of Investments (10,000) 668,000 Net Income $97,000 RAINBOW COMPANY Balance...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT