'Antiquated Spells', a line of inventory has become obsolete and can only be sold for 20% below cost. Discuss why a stocktake is necessary and how to account for the missing stock and the obsolete inventory.
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- Company Elmira reported the following cost of goods sold but later realized that an error had been made in ending inventory for year 2021. The correct inventory amount for 2021 was 32,000. Once the error is corrected, (a) how much is the restated cost of goods sold for 2021? and (b) how much is the restated cost of goods sold for 2022?Umatilla Bank and Trust is considering giving Pohl Company a loan. Before doingso, it decides that further discussions with Pohl’s accountant may be desirable. One areaof particular concern is the Inventory account, which has a year-end balance of $275,000.Discussions with the accountant reveal the following. 1. Pohl sold goods costing $55,000 to Hemlock Company FOB shipping point onDecember 28. The goods are not expected to reach Hemlock until January 12. Thegoods were not included in the physical inventory because they were not in thewarehouse. 2. The physical count of the inventory did not include goods costing $95,000 that wereshipped to Pohl FOB destination on December 27 and were still in transit at year-end. 3. Pohl received goods costing $25,000 on January 2. The goods were shipped FOB shipping point on December 26 by Yanice Co. The goods were not included in the physicalcount. 4. Pohl sold goods costing $51,000 to Ehler of Canada FOB destination on December 30.The goods were…Grocery Ltd is a retailer and sells various products. It follows the perpetual inventory method. Because of supply chain disruptions, the cost of purchasing products increased during the year 2021. However, considering the economic hardship of people caused by Covid-19 pandemic, the company did not increase its sales price. The company purchases goods on three-month credit and sells goods for cash. The following information relates to the inventories of a particular product and related balances and transactions of the company for the year ended 31 December 2021. The company uses the weighted average method to assign costs to goods sold and ending inventories. The sales price is $3.50 per unit. The income tax rate is 28%. 1 January 2021 Beginning balances: Cash: $60,000 Accounts payable: $8,500. Inventory 10,000 units @ $2.10 per unit. January-February 2021 Sold 4,000 units. February 2021 Sales returns: 10 units. Cash is refunded to customers on return of the…
- Grocery Ltd is a retailer and sells various products. It follows the perpetual inventory method. Because of supply chain disruptions, the cost of purchasing products increased during the year 2021. However, considering the economic hardship of people caused by Covid-19 pandemic, the company did not increase its sales price. The company purchases goods on three-month credit and sells goods for cash. The following information relates to the inventories of a particular product and related balances and transactions of the company for the year ended 31 December 2021. The company uses the weighted average method to assign costs to goods sold and ending inventories. The sales price is $3.50 per unit. The income tax rate is 28%. 1 January 2021 Beginning balances: Cash: $60,000 Accounts payable: $8,500. Inventory 10,000 units @ $2.10 per unit. January-February 2021 Sold 4,000 units. February 2021 Sales returns: 10 units. Cash is refunded to customers on return of the…Grocery Ltd is a retailer and sells various products. It follows the perpetual inventory method. Because of supply chain disruptions, the cost of purchasing products increased during the year 2021. However, considering the economic hardship of people caused by Covid-19 pandemic, the company did not increase its sales price. The company purchases goods on three-month credit and sells goods for cash. The following information relates to the inventories of a particular product and related balances and transactions of the company for the year ended 31 December 2021. The company uses the weighted average method to assign costs to goods sold and ending inventories. The sales price is $3.50 per unit. The income tax rate is 28%. 1 January 2021 Beginning balances: Cash: $60,000 Accounts payable: $8,500. Inventory 10,000 units @ $2.10 per unit. January-February 2021 Sold 4,000 units. February 2021 Sales returns: 10 units. Cash is refunded to customers on return of the…Grocery Ltd is a retailer and sells various products. It follows the perpetual inventory method. Because of supply chain disruptions, the cost of purchasing products increased during the year 2021. However, considering the economic hardship of people caused by Covid-19 pandemic, the company did not increase its sales price. The company purchases goods on three-month credit and sells goods for cash. The following information relates to the inventories of a particular product and related balances and transactions of the company for the year ended 31 December 2021. The company uses the weighted average method to assign costs to goods sold and ending inventories. The sales price is $3.50 per unit. The income tax rate is 28%. 1 January 2021 Beginning balances: Cash: $60,000 Accounts payable: $8,500. Inventory 10,000 units @ $2.10 per unit. January-February 2021 Sold 4,000 units. February 2021 Sales returns: 10 units. Cash is refunded to customers on return of the…
- Lynch, Inc., is a hardware store operating in Boulder, Colorado. Management recently made some poor inventory acquisitions that have loaded the store with unsalable merchandise. Because of the drop in revenues, the company is now insolvent. The entire inventory can be sold for only $33,000. Following is a trial balance as of March 14, 2017, the day the company files for a Chapter 7 liquidation:Company officials believe that 60 percent of the accounts receivable can be collected if the company is liquidated. The building and land have a fair value of $75,000, and the equipment is worth $19,000. The investments represent shares of a nationally traded company that can be sold at the current time for $21,000. Administrative expenses necessary to carry out a liquidation would approximate $16,000.Prepare a statement of financial affairs for Lynch, Inc., as of March 14, 2017.Umatilla Bank and Trust is considering giving Novak Corp. a loan. Before doing so, it decides that further discussions with Novak’s accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $261,940. Discussions with the accountant reveal the following. 1. Novak shipped goods costing $55,800 to Hemlock Company FOB shipping point on December 28. The goods are not expected to reach Hemlock until January 12. The goods were not included in the physical inventory because they were not in the warehouse. 2. The physical count of the inventory did not include goods costing $97,720 that were shipped to Novak FOB destination on December 27 and were still in transit at year-end. 3. Novak received goods costing $25,980 on January 2. The goods were shipped FOB shipping point on December 26 by Yanice Co. The goods were not included in the physical count. 4. Novak shipped goods costing $54,080 to Ehler of Canada FOB…Jackson Specialties has been in business for more than 50 years. The company maintains a per-petual inventory system, uses a LIFO flow assumption, and ends its fiscal year at December 31. At year-end, the cost of goods sold and inventory are adjusted to reflect periodic LIFO costingprocedures.A railroad strike has delayed the arrival of purchases ordered during the past several months of2011, and Jackson Specialties has not been able to replenish its inventories as merchandise is sold. At December 22, one product appears in the company’s perpetual inventory records at the follow-ing unit costs: Purchase Date Quantity Unit Cost Total CostNov. 14, 1958 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000 $6 $18,000Apr. 12, 1959 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 8 16,000Available for sale at Dec. 22, 2011. . . . . . . . . . . . . . . . 5,000 $34,000 Jackson Specialties has another 8,000 units of this product on order at the current…
- Legend Company sold $87,000 worth of goods on account to Destiny Inc. on June 20. It cost Legend $60,900 to make these goods. Destiny has 30 days to return the goods for any reason. On July 1, Destiny returns $8,000 worth of goods that had cost Legend $5,600. Legend expects to be able to resell these goods for a profit. Prepare the following entries on the books of Legend Company: Journal entries to record the initial sales on June 20 if a perpetual inventory system is usedUmatilla Bank and Trust is considering giving Sheffield Corp. a loan. Before doing so, it decides that further discussions with Sheffield’s accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $273,850. Discussions with the accountant reveal the following. 1. Sheffield shipped goods costing $53,860 to Hemlock Company FOB shipping point on December 28. The goods are not expected to reach Hemlock until January 12. The goods were not included in the physical inventory because they were not in the warehouse. 2. The physical count of the inventory did not include goods costing $88,840 that were shipped to Sheffield FOB destination on December 27 and were still in transit at year-end. 3. Sheffield received goods costing $26,690 on January 2. The goods were shipped FOB shipping point on December 26 by Yanice Co. The goods were not included in the physical count. 4. Sheffield shipped goods costing $52,540 to…TS Quilts Inc. took a physical inventory at the end of the year and determined that $414,000 of goods were on hand. TS Inc. determined that $12,000 of goods held and included in the court were being held on consignment from PDJ outlet. Additionally, because of high rates of return on some products, TS has established an estimate of items that will be returned of $17,000. What amount should TS report in their year-end balance sheet for the inventory account?
