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 inventory excluded $800 of merchandise held on consignment.

d. $750 of in-transit merchandise was shipped f.o.b. destination to a customer and was excluded from the physical inventory count. The merchandise was turned over to a common carrier on December 28, 2020, and is expected to arrive at the customer on January 2, 2021.

e. Ultim Corp. ordered merchandise on December 26, 2020. The merchandise ($800) was shipped to Ultim Corp. f.o.b. shipping point, and was expected to arrive January 2, 2021. The merchandise was not included in the physical inventory count.

f. A return to a vendor of merchandise for $1,000 was in-transit on December 31, 2020, and was excluded from the physical inventory count. The merchandise was shipped f.o.b. shipping point on December 30, 2020.

Required

Considering items a through f, determine the adjusted inventory balance for Ultim Corp.

Adjusted inventory balance on December 31, 2020:

Answer

Solutions

Expert Solution

Solution

Ultim Corp

Adjusted inventory balance on December 31, 2020 –

Explanation –

a. $250 inventory set aside for shipment forms part of inventory until the shipment is made.

b. $1,000 of inventory out on consignment forms part of inventory until the sale is made.

The ownership of consignment goods remains with the Ultim, until the sale is made.

c. No adjustment is needed. The goods held on consignment do not form part of inventory, hence the goods should be excluded. Ultim was correct in excluding $800 from inventory count.

d. The ownership of goods in transit (fob destination) remains with Ultim until the goods reach the destination of the customer, hence $750 should be included since the goods are expected to reach customer on Jan 2, 2021. So, on December 31, 2020 Ultim is the owner of goods.

e. The ownership of goods in transit (fob shipping point) from supplier remains with Ultim, since the shipment has already been made on Dec 26^th. Hence, include $800.

f. The ownership of goods returned, fob shipping point transfers to the vendor once the shipping is started on Dec 30^th. Hence, Ultim was correct in excluding $1,000 from inventory.

ekkarill92 answered 10 months ago

Next > < Previous

Related Solutions

The following list of accounts is taken from the December 31, 2020, unadjusted trial balance of...

The following list of accounts is taken from the December 31, 2020, unadjusted trial balance of Perdu Sales, a business that is owned by Eldon Perdu. Debit Credit Cash $ 8,000 Merchandise inventory 9,800 Prepaid selling expense 8,000 Store equipment 40,000 Accumulated depreciation, store equipment $ 9,800 Accounts payable 14,840 Salaries payable 0 Eldon Perdu, capital 25,360 Eldon Perdu, withdrawals 3,600 Sales 858,000 Sales returns and allowances 33,000 Sales discounts 8,000 Cost of goods sold 431,000 Sales salaries expense 94,000...

ABC Corporation’s year-end is 31 December. Based on an analysis of the unadjusted trial balance at...

ABC Corporation’s year-end is 31 December. Based on an analysis of the unadjusted trial balance at 31 December, 2019, the following information was available: 1. Machinery costing $77,500 was acquired on 1 January 2019. It is estimated to have a useful life of six years. The machinery is estimated to have a $5,500 value at the end of its six-year life. 2. Accrued revenues at year-end totalled $14,500. 3. The Prepaid Insurance account showed a balance of $15,000. This was...

Kash Company is reviewing its December 31, 2020 unadjusted trial balance and determines that a sale...

Kash Company is reviewing its December 31, 2020 unadjusted trial balance and determines that a sale in the amount of $15,000 had been incorrectly recorded as a debit to sales and a credit to accounts receivables. The correcting journal entry at December 31, 2020 is: Debit accounts receivables and credit sales $30,000 Debit accounts receivables and credit retained earnings $30,000 Debit retained earnings and credit sales $15,000 Debit accounts receivables and credit sales $15,000

The unadjusted trial balance of Vancouver Trucking Inc., at December 31, 2020, is as follows:DebitCreditCash$17,310Accounts Receivable102,500Allowance...

The unadjusted trial balance of Vancouver Trucking Inc., at December 31, 2020, is as follows:DebitCreditCash$17,310Accounts Receivable102,500Allowance for Doubtful Accounts$3,390Inventory61,000Prepaid Insurance4,559Bond Investment at Amortized Cost57,120Land31,800Buildings154,000Accumulated Depreciation—Buildings12,560Equipment32,400Accumulated Depreciation—Equipment5,400Goodwill17,000Accounts Payable100,400Bonds Payable (20-year, 7%)162,000Common Shares120,100Retained Earnings61,139Sales Revenue197,000Rent Revenue10,350Advertising Expense23,400Supplies Expense10,300Purchases97,100Purchase Discounts950Salaries and wages expense52,800Interest Expense12,000$673,289$673,289 Preparethe followingadjusting and correcting entries for December 31, 2020, using the information given, for the scenarios below (#1 -#9): 1.Actual advertising costs amounted to $1,580 per month. The company has already paid for advertisements for the first quarter of...

The unadjusted trial balance of Imagine Ltd., a private company following ASPE, at December 31, 2020...

The unadjusted trial balance of Imagine Ltd., a private company following ASPE, at December 31, 2020 is as follows: Debit Credit Cash $10,850 Accounts receivable 56,500 Allowance for doubtful accounts $750 FV-NI investments 8,600 Inventory 58,000 Prepaid insurance 2,940 Prepaid rent 13,200 FV-OCI investments 14,000 Bond investment at amortized cost 18,000 Land 10,000 Equipment 104,000 Accumulated depreciation—equipment 18,000 Accounts payable 9,310 Bonds payable 50,000 Common shares 100,000 Retained earnings 103,260 Sales revenue 223,310 Rent revenue 10,200 Purchases 170,000 Purchase discounts...

Use the unadjusted trial balance of Electric Bike on December 31, 2020. Debit Credit Cash $...

Use the unadjusted trial balance of Electric Bike on December 31, 2020. Debit Credit Cash $ 7,700 Accounts receivable 22,265 Merchandise inventory 34,200 Store supplies 2,215 Office supplies 915 Prepaid insurance 4,655 Equipment 70,090 Accumulated depreciation, equipment $ 13,255 Accounts payable 7,600 Salaries payable 0 Braeden Li, capital 163,945 Braeden Li, withdrawals 60,000 Interest income 270 Sales 527,000 Sales returns and allowances 4,670 Cost of goods sold 380,760 Salaries expense 95,900 Rent expense 28,700 Supplies expense 0 Depreciation expense, equipment...

Novak Corp.’s December 31, 2020 trial balance includes the following accounts: Inventory $140,000; Buildings $217,000; Accumulated...

Novak Corp.’s December 31, 2020 trial balance includes the following accounts: Inventory $140,000; Buildings $217,000; Accumulated Depreciation—Equipment $20,100; Equipment $207,000; Land Held for Speculation $47,000; Accumulated Depreciation—Buildings $46,100; Land $75,000; Equipment Under Lease $248,000; and Accumulated Depreciation—Leased Equipment $103,800. Prepare the property, plant, and equipment section of the statement of financial position. (List in order of Property, Plant and Equipment.)

Simmons Corp Balance Sheet As of December 31, 2019 and June 30, 2020 Assets 2019 2020...

Simmons Corp Balance Sheet As of December 31, 2019 and June 30, 2020 Assets 2019 2020 Liabilities 2019 2020 Cash $700 Accounts payable $550 Accounts receivable 50 Salaries payable 50 Total current assets 750 Interest payable 0 Equipment 500 Total current liabs 600 Acc. depreciation (100) Notes payable 100 Equity Common stock 100 Retained earnings 350 Total assets $1,150 Total liabs and eq $1,150 During 2020 to date (June 30, 2020), Simmons had the following transactions: Provided services to customers...

The following balance sheets have been prepared on December 31, 2020 for A Corp. and B...

The following balance sheets have been prepared on December 31, 2020 for A Corp. and B Inc. A B Cash $30,000 $20,000 Inventory $70,000 $30,000 Accounts Receivable $180,000 $70,000 Investment in Rat $200,000 Fixed Assets $500,000 $90,000 Accumulated Depreciation ($280,000) ($30,000) Total Assets $700,000 $180,000 Current Liabilities $120,000 $60,000 Long-Term Debt $400,000 $20,000 Common Shares $90,000 $40,000 Retained Earnings $90,000 $60,000 Liabilities and Equity $700,000 $180,000 Balance Sheets Additional Information: A uses the cost method to account for its 50%...

Cougar Corp.'s balance sheet as of December 31, 2020 includes an item of equipment with an...

Cougar Corp.'s balance sheet as of December 31, 2020 includes an item of equipment with an original cost of $95,000 which was purchased on January 1, 2017. The equipment has an economic life of 20 years. For Cougar, the useful life of the asset is 15 years and the residual value is expected to be $5,000. Cougar determines that the asset’s value in use is $58,000. Based on market assessments, the fair value of the asset is $66,000 and if...

Subjects