Late on the night of August 30, 2021, an arsonist destroyed the FAITHFUL Inc's warehouse which was full of inventory. The accounting records were stored in another facility and not destroyed in the fire. The company is in the process of filing a claim with its insurance company for the inventory loss due to the fire. Beginning inventory P350,500
Q: Top Sound International designs and sells high-end stereo equipment for auto and home use. Engineers…
A: The question is related to Provisions and Contingent Liabilities.
Q: Production at the Paint Company’s factory was halted for one day when a truck carrying dye used in…
A: Audit opinion is provided by the auditor when he audits or verifies the financial statement of the…
Q: On September 14, 2020, a typhoon damaged a warehouse of TULIP Corporation. The entire company and…
A: Particulars Amount($) Collection of accounts receivables 4,230,000 Add: Ending accounts…
Q: How much would be the loss on derecognition to be recogniz
A: To answer this question, firstly we need to calculate the Total Acquisition cost of the Machine:…
Q: A warehouse was bought by Great Co on November 30, 2019 costing P3,400,000 for storage of product Y.…
A: Insurance Premium is an expense paid every financial year by a company to insure its assets and…
Q: On September 30, 2022, the company sold old equipment for $27,600. The equipment was purchased on…
A: Depreciation - Depreciation is incurred on the assets for normal usage, wear and tear, obsolescence.…
Q: Accounting Ethics Case Sunrise Pools, Inc., is being sued by the crescent club for negligence when…
A: Identify the ethical problem which is faced by the vice president of finance if he follows the…
Q: CHAS, Inc. is engaged in the sale of parts for electric gate motors for residential and commercial…
A: Accounts Payable seems to be the title used whenever a company purchases goods on credit and must…
Q: A company had a building destroyed by fire. The building originally cost $650,000 and its…
A: The original cost of building, accumulated depreciation is given. The building got destroyed by fire…
Q: Top Sound International designs and sells high-end stereo equipment for auto and home use. Engineers…
A:
Q: An earth quake damaged a warehouse of Kupal Girl Corporation On December 31, 2011. The entire…
A: Answer: Inventory lost =$2,275,920 computation of total credit sales during the year: Accounts…
Q: Conrad Playground Supply underwent a restructuring in 2021. The company conducted a thorough…
A: Journal entry is the process of documenting commercial transactions for the first time in the books…
Q: The first audit of the books of Concord Company was made for the year ended December 31, 2021. In…
A: An audit seems to be the study or review of multiple accounting records by an auditor, accompanied…
Q: The warehouse had a fire on November 7, 2021, which resulted in the destruction of merchandise worth…
A: Loss by fire is one of the loss that is being incurred by the business on inventory lost by fire.…
Q: The EPA has notified a company of violations of environmental laws relating to hazardous waste.…
A: Accounting treatment of Contingent liability : As per International Accounting Standards or…
Q: amount of provision should Damn accrue
A: Contingent liabilities are probable liabilities, the repayment of them is contingent upon an…
Q: SENTIENT AWARE Co. is engaged in logistics services. During the year, a warehouse was destroyed by…
A: We know that a provision is a liability that arises from past events and with an uncertain amount.…
Q: Use the following information for questions 6 and On December 31, 2018, Garnel Co. is in financial…
A: Net book value of the Equipment = Original cost - Accumulated depreciation Gain (loss) on the…
Q: On April 30, 20x2, an explosion occurred at CONVOLUTE TWIST Co's plant causing extensive property…
A: No disclosure or accrual is required. Only if there is a likelihood, or at least a reasonable…
Q: 60,000 understated; Depreciation expense 60,000 understated; Insurance expense 100,000 overstated;…
A: There are various errors that take place while recording, classifying, and summarising accounting…
Q: Swifty Company's delivery truck, which originally cost $83100, was destroyed by fire. At the time of…
A: The correct option is option "a” (21,400 gain).
Q: A mentally deranged employee, Mr. Arson, put a torch to a factory on February 20, 2018. The…
A: Cost Sheet: The copmonents of cost can be presented in the form of statement known as Cost Sheet.…
Q: The first audit of the books of Bruce Gingrich Company was made for the year ended December 31,…
A:
Q: 3) The client purchased raw material that was received just before year-end. The purchase was…
A: An independent Auditor's Report seems to be an authorized opinion made by an external or internal…
Q: Prepare the journal entries necessary in 2021 to correct the books, assuming that the books have not…
A:
Q: Whittier Construction Co. had followed the practice of expensing all materials assigned to a…
A: please like the answer your response matters All the salvage inventory needs to be evaluated at the…
Q: The first audit of the books of Concord Company was made for the year ended December 31, 2021. In…
A: Working Notes: Formula: Computations:
Q: Blossom Inc. recently replaced a piece of automatic equipment at a net price of $3,500, f.o.b.…
A: Computation of purchase price of new equipment:
Q: Write double entry? On 7 November 2021 there was a fire in the warehouse, in which inventory valued…
A: When there is a loss of goods by fire, an expense account is debited named loss by fire account and…
Q: On June 30, 2016, a fire in Jeremy Company's plant caused the total loss of a production machine.…
A: Depreciation is charged on value of fixed assets in order to present and report correct carrying…
Q: 100,000 understated. On
A: A series of high-level reports that describe a company's monetary performance, financial position,…
Q: Sound Audio manufactures and sells audio equipment for automobiles. Engineers notified management…
A: 1. The loss due to the flawed product is a contingency and must be estimated probably and…
Q: he first audit of the books of Windsor Company was made for the year ended December 31, 2021. In…
A: Journal entry is the process of documenting commercial transactions for the first time in the books…
Q: Sound Audio manufactures and sells audio equipment for automobiles. Engineers notified management in…
A: 1. The loss due to the flawed product is a contingency and must be estimated probably and…
Q: Shannon Company began operations on January 1, 2020. The financial statement contained the following…
A: There are various errors that take place while recording, classifying, and summarising accounting…
Q: Conrad Playground Supply underwent a restructuring in 2021. The company conducted a thorough…
A:
Q: Blossom Inc. recently replaced a piece of automatic equipment at a net price of $3,500, f.o.b.…
A: Journal entry is the process of recording the business transactions in the books of accounts for the…
Q: Top Sound International designs and sells high-end stereo equipment for auto and home use. Engineers…
A: 1 ) Contingent liability is a liability that happen to occur on happening of an event or incident .A…
Q: A warehouse was bought by Great Co on November 30, 2019 costing P3,400,000 for storage of product Y.…
A: Step 1 It is the event adjustments in the final accounts.
Q: Dowell Fishing Supply, Inc., sold $50,000 of Dowell Rods on December 15, 2021, to Bassadrome.…
A: Bill and hold sales recognize revenue: Customer use to purchase goods and requests the seller to…
Q: Conrad Playground Supply underwent a restructuring in 2021. The company conducted a thorough…
A: A journal entry is a form of accounting entry that is used to report a business transaction in a…
Q: uilding, plant and an amount equal to one year’s net profit. During the year, there were a number of…
A: In accounting if there is fixed that of amount will be received than is it shown as accrual amount…
Q: Conrad Playground Supply underwent a restructuring in 2021. The company conducted a thorough…
A: SOLUTION- JOURNAL…
Q: Dowell Fishing Supply, Inc., sold $50,000 of Dowell Rods on December 15, 2018, to Bassadrome.…
A: Bill and hold sales recognize revenue: The customer used to purchase goods and request the seller…
Q: On December 31, 2021, a machine owned by SLP COMPANY was destroyed by a fire. SLP COMPANY incurred…
A: The question is based on the concept used for accounting for loss. The loss should be reported on…
Q: GINGERBREAD Company is involved in a litigation regarding a faulty product sold in a prior year. The…
A: SOLUTION- EXPLANATION- THE EVENT RELATED TO CONTINGENT OBLIGATION IS NOT PROBABLE .IT MEANS THAT…
Q: Shannon Company began operations on January 1, 2020. The financial statement contained the following…
A: A series of high-level reports that describe a company's monetary performance, financial position,…
Q: Do you want to make a double entry? On November 7, 2021, a fire broke out at the store, destroying…
A: There are three golden rules in accounting for recording the transaction : Debit what comes in ,…
Q: hannon Company began operations on January 1, 2020. The financial statement contained the following…
A: Prior Period Errors are the errors done while recording the transactions of the prior financial…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Pending Damage Suit Disclosure On December 15, 2019, a truck driver for Cork Transfer Company negligently rounded a curve that was also a bridge covering several local merchant shops. The truck jumped the guardrail and fell 30 feet onto one of the shops, causing highly flammable chemicals in the truck to explode. Although by February 22, 2020 (the date on which Corks financial statements for 2019 are issued), no claims had been filed against Cork, the companys legal counsel believes it is probable that some will be filed in the future. However, counsel does not believe it can reasonably estimate the amount of these potential claims. Required: Explain the accounting treatment, if any, Cork should give the contingent loss occurring from the wreck in the December 31, 2019, financial statements.Refer to the information in E22-13. Required: Prepare the correcting journal entries if the company discovers each error 2 years after it is made and it has closed the books for the second year. Ignore income taxes. E22-13: The following are independent errors made by a company that uses the periodic inventory system: a. Goods in transit, purchased on credit and shipped FOB destination, 10,000, were included in purchases but not in the physical count of ending inventory. b. Purchase of a machine for 2,000 was expensed. The machine has a 4-vear life, no residual value, and straight-line depreciation is used. c. Wages payable of 2,000 were not accrued. d. Payment of next years rent, 4,000, was recorded as rent expense. e. Allowance for doubtful accounts of 5,000 was not recorded. The company normally uses the aging method. f. Equipment with a book value of 70,000 and a fair value of 100,000 was sold at the beginning of the year. A 2-year, non-interest-bearing note for 129,960 was received and recorded at its face value, and a gain of 59,960 was recognized. No interest revenue was recorded and 14% is a fair rate of interest.Consider the following situations and determine (1) which type of liability should be recognized (specific account), and (2) how much should be recognized in the current period (year). A. A business depreciates a building with a book value of $12,000, using straight-line depreciation, no salvage value, and a remaining useful life of six years. B. An organization has a line of credit with a supplier. The company purchases $35,500 worth of inventory on credit. Terms of purchase are 3/20, n/60. C. An employee earns $1,000 in pay and the employer withholds $46 for federal income tax. D. A customer pays $4,000 in advance for legal services. The lawyer has previously recognized 30% of the services as revenue. The remainder is outstanding.
- Wormold Industries suffered a fire in its warehouse on March 4, 2021. The warehouse was fullof finished goods, and after reviewing the damage, management determined that inventory,with a retail selling price of $90,000, was not damaged by the fire.For the period from January 1, 2021, to March 4, 2021, accounting records showed thefollowing: Purchases $650,000Purchase returns 16,000Sales revenue 955,000 The inventory balance on January 1, 2021, was $275,000, and the company has historicallyearned a gross profit percentage of 35%.Required: Use the gross profit method to determine the cost of inventory damaged by the fire.What did i do wrong in my calculations? On November 21, 2021, a fire at Hodge Company’s warehouse caused severe damage to its entire inventory of Product Tex. Hodge estimates that all usable damaged goods can be sold for $18,000. The following information was available from the records of Hodge’s periodic inventory system: Inventory, November 1 $ 130,000 Net purchases from November 1, to the date of the fire 146,000 Net sales from November 1, to the date of the fire 226,000 Based on recent history, Hodge’s gross profit ratio on Product Tex is 30% of net sales. Required:Calculate the estimated loss on the inventory from the fire, using the gross profit method. $134,200Write double entry? On 7 November 2021 there was a fire in the warehouse, in which inventory valued at $12,000 was destroyed. Under the terms of the insurance contract, the insurance company has stated that it will only pay out the first $3,000 of the claim. No entries have yet been made to record this.
- On November 21, 2024, a fire at Hodge Company’s warehouse caused severe damage to its entire inventory of Product Tex. Hodge estimates that all usable damaged goods can be sold for $26,000. The following information was available from the records of Hodge’s periodic inventory system: Inventory, November 1, 2024 $ 170,000 Net purchases from November 1, to the date of the fire 154,000 Net sales from November 1, to the date of the fire 234,000 Based on recent history, Hodge’s gross profit ratio on Product Tex is 40% of net sales. Required: Calculate the estimated loss on the inventory from the fire, using the gross profit method.On September 30, 2020, a fire at Gray Company’s warehouse caused severe damage to its entire inventory. Based on recent history, Gray has a gross profit of 30% of net sales. A physical inventory disclosed usable damaged goods which Gray estimates can be sold to a jobber for P50,000. The following information is available from Gray's records for the nine months ended September 30, 2020.Inventory, Jan. 1 - P550,000Total purchases recorded, Jan. 1 – Sept. 30 (includes P120,000 of goods still in transit, shipped Sept. 29, FOB shipping point) - P3,120,000Freight in - P60,000Purchase returns - P200,000Purchase discounts - P80,000Total sales delivered and recorded, Jan. 1 – Sept. 30 - P3,900,000Sales returns - P160,000Sales discounts - P40,000Using the gross profit method, how much is the inventory loss?On September 30, 2020, a fire at Cherimoya Company’s warehouse caused severe damage to its entire inventory. Based on recent history, Cherimoya has a gross profit of 30% of net sales. A physical inventory disclosed usable damaged goods which Cherimoya estimates can be sold to a jobber for P50,000. The following information is available from Cherimoya’s records for the nine months ended September 30, 2020.Inventory, Jan. 1 - P550,000Total purchases recorded, Jan. 1 – Sept. 30 (includes P120,000 of goods still in transit, shipped Sept. 29, FOB shipping point) - P3,120,000Freight in - P60,000Purchase returns - P200,000Purchase discounts - P80,000Total sales delivered and recorded, Jan. 1 – Sept. 30 - P3,900,000Sales returns - P160,000Sales discounts - P40,000Using the gross profit method, how much is the inventory loss?
- A fire destroyed a warehouse of the Goren Group, Inc., on May 4, 2021. Accounting records on that date indicated the following: Merchandise inventory, January 1, 2021 $1,900,000Purchases to date 5,800,000Freight-in 400,000Sales to date 8,200,000 The gross profit ratio has averaged 20% of sales for the past four years.Required:Use the gross profit method to estimate the cost of the inventory destroyed in the fire.12. On September 30, 2020, a fire at Cherimoya Company’s warehouse caused severe damage to its entire inventory. Based on recent history, Cherimoya has a gross profit of 30% of net sales. A physical inventory disclosed usable damaged goods which Cherimoya estimates can be sold to a jobber for P50,000. The following information is available from Cherimoya’s records for the nine months ended September 30, 2020.Inventory, Jan. 1 - P550,000Total purchases recorded, Jan. 1 – Sept. 30 (includes P120,000 of goods still in transit, shipped Sept. 29, FOB shipping point) - P3,120,000Freight in - P60,000Purchase returns - P200,000Purchase discounts - P80,000Total sales delivered and recorded, Jan. 1 – Sept. 30 - P3,900,000Sales returns - P160,000Sales discounts - P40,000Using the gross profit method, how much is the inventory loss? a. P602,000 b. P662,000 c. P782,000 d. P832,000On September 28, 2019, a fire destroyed the entire merchandise inventory of Carroll Corporation. The fllowing information is available: What is the estimated inventor)' on September 28, 2019, immediately prior to the fire?