Question
In: Accounting
5. Bridgemen Inc. is preparing its 2017 yearend financial statements . Prior to any possible adjustments...
5. Bridgemen Inc. is preparing its 2017 yearend financial statements . Prior to any possible adjustments from the items listed below, inventory was valued at $75,060, based on a physical count of the goods on hand.
- Goods valued at 11,000 are on consignment with Clark Company.
- Goods costing $2,800 were received from a vendor on January 4, 2018. The related invoice was received and recorded on January 12, 2018. The goods had been shipped on December 31, 2017, FOB shipping point.
- Goods costing $8,400 were shipped on December 31, FOB shipping point. These were delivered to the customer on January 2, 2018. The goods had been included in the physical count of inventory, and the sale had been recorded upon delivery to the customer.
- A shipment of goods to a customer priced at $3,500, terms FOB destination, delivered on January 5, 2018, was not included in the inventory count at 12/31. They cost Bridgemen $2,600. The sale was recorded in 2017.
- An invoice from Cole Inc. for goods costing $5,500 was received and recorded on December 27, 2017. The related goods were shipped FOB destination on December 27 and arrived at Bridgemen’s business on January 3, 2018.
- Goods valued at $6,500 are on consignment from Fields Corp. These goods were not included in the physical count.
- A $9,750 shipment of goods to a customer on December 30, 2017 FOB destination was recorded as a sale in 2017. The goods, costing $8,250, were delivered to the customer on January 8, 2018.
5a. Justify your treatment of each of the above items in the calculation of ending inventory at December 31, 2017
5b. Compute the proper inventory amount for the December 31, 2017 balance sheet.
5c. By how much would Bridgemen’s net income be misstated if no adjustments had been made for the items above?
5d. If Bridgemen did not find this list of possible errors until after the audit were completed, but before the end of 2018, prepare any necessary entry. Bridgemen uses the periodic inventory system and assume the amounts are material. Hint: Chapter 23 could be useful…
Solutions
ekkarill92 answered 9 months agoRelated Solutions
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Prior Year
Balance
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Assets
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$
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Accounts
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Current Year
Prior Year
Balance Sheet
Assets
Cash
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125,100
$
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Accounts receivable
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Merchandise inventory
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123,500
Property and equipment
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Prior Year
Balance Sheet
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$
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115,500
Merchandise inventory
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Property and equipment
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