The RealReal, Incorporated, is a public company that sells authenticated luxury goods, similar to Second Chance Clothing (SCC). SCC acquires its goods on consignment and through purchase. The following events occurred close to SCC's October 31 year-end. Required: Indicate (Yes or No) whether SCC should include each item in its inventory balance at October 31. a. On November 2, SCC received goods on consignment from Apparel Corporation. b. On October 31, SCC received goods on consignment from Apparel Corporation. c. Goods in transit to SCC were shipped by Shoe, Incorporated, on October 31, FOB shipping point. d. Goods in transit to SCC were shipped by Shoe, Incorporated, on October 31, FOB destination.

The RealReal, Incorporated, is a public company that sells authenticated luxury goods, similar to Second Chance Clothing (SCC). SCC acquires its goods on consignment and through purchase. The following events occurred close to SCC's October 31 year-end. Required: Indicate (Yes or No) whether SCC should include each item in its inventory balance at October 31. a. On November 2, SCC received goods on consignment from Apparel Corporation. b. On October 31, SCC received goods on consignment from Apparel Corporation. c. Goods in transit to SCC were shipped by Shoe, Incorporated, on October 31, FOB shipping point. d. Goods in transit to SCC were shipped by Shoe, Incorporated, on October 31, FOB destination.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 2EA: Company accepts goods on consignment from R Company and also purchases goods from S Company during...

See similar textbooks

Similar questions

Consider each of the following independent situations. Should a company report the goods in its inventory? (a) Goods purchased by the company with shipping terms FOB shipping point that are in transit at the end of the year (b) Goods received by the company on consignment (c) An estimate of the amount of goods sold by the company that it expects the buyer to return (d) Goods required to be purchased by the company under an unconditional purchase obligation
Serene Company purchases fountains for its inventory from Kirkland Inc. The following transactions take place during the current year. A. On July 3, the company purchases thirty fountains for $1,200 per fountain, on credit. Terms of the purchase are 2/10, n/30, invoice dated July 3. B. On August 3, Serene does not pay the amount due and renegotiates with Kirkland. Kirkland agrees to convert the debt owed into a short-term note, with an 8% annual interest rate, payable in two months from August 3. C. On October 3, Serene Company pays its account in full. Record the journal entries to recognize the initial purchase, the conversion, and the payment.
Palisade Creek Co. is a merchandising business that uses the perpetual inventory system. The account balances for Palisade Creek Co. as of May 1, 2019 (unless otherwise indicated), are as follows: During May, the last month of the fiscal year, the following transactions were completed: Instructions 1. Enter the balances of each of the accounts in the appropriate balance column of a four-column account. Write Balance in the item section and place a check mark () in the Posting Reference column. Journalize the transactions for May, starting on Page 20 of the journal. 2. Post the journal to the general ledger, extending the month-end balances to the appropriate balance columns after all posting is completed. In this problem, you are not required to update or post to the accounts receivable and accounts payable subsidiary ledgers. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6). 5. (Optional) Enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work sheet), and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 22 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a statement of owners equity, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 23 of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. Insert the new balance in the owners capital account. 10. Prepare a post-closing trial balance.
Schmidt Company began operations on January 1, 2018, and used the LIFO inventory method for both financial reporting and income taxes. However, at the beginning of 2020, Schmidt decided to switch to the average cost inventory method for financial and income tax reporting. It had previously reported the following financial statement information for 2019: An analysis of the accounting records discloses the following cost of goods sold under the LIFO and average cost inventory methods: There are no indirect effects of the change in inventory method. Revenues for 2020 total 130,000; operating expenses for 2020 total 30,000. Schmidt is subject to a 21% income tax rate in all years; it pays all income taxes payable in the next quarter. Assume that any deferred tax liability was paid in the subsequent year. Schmidt had 10,000 shares of common stock outstanding during all years; it paid dividends of 1 per share in 2020. At the end of 2020, Schmidt had cash of 15,600, inventory of 34,000, other assets of 76,000, income taxes payable of 4,200, and accounts payable of 3,000. It desires to show financial statements for the current year and previous year in its 2020 annual report. Required: 1. Prepare the journal entry to reflect the change in method at the beginning of 2020. Show supporting calculations. 2. Prepare the 2020 financial statements. Notes to the financial statements are not necessary. Show supporting calculations.
Koopman Company began operations on January 1, 2018, and uses they FIFO inventory method for financial reporting and the average cost inventory method for income taxes. At the beginning of 2020, Koopman decided to switch to the average cost inventory method for financial reporting. It had previously reported the following financial statement information for 2019: An analysis of the accounting records discloses the following cost of goods sold under the FIFO and average cost inventory methods: There are no indirect effects of the change in inventory method. Revenues for 2020 total 130,000; operating expenses for 2020 total 30,000. Koopman is subject to a 21% income tax rate in all years; it pays the income taxes payable of a current year in the first quarter of the next year. Koopman had 10,000 shares of common stock outstanding during all years; it paid dividends of 1 per share in 2020. At the end of 2020, Koopman had cash of 10,000, inventory of 24,000, other assets of 70,800, accounts payable of 4,500, and income taxes payable of 6,000. It desires to show financial statements for the current year and previous year in its 2020 annual report. Required: 1. Prepare the journal entry to reflect the change in methods at the beginning of 2020. Show supporting calculations. 2. Prepare the 2020 financial statements. Notes to the financial statements are not necessary. Show supporting calculations.
Business with gross receipts of $25 million or less may treat inventory as nonincidental materials and supplies. Find Regulation Section 1.162-3 and read paragraphs (a)(1) and (a)(2) to help answer the following: Frank owns an auto repair shop that serves a particular model of auto and so he tends to purchase parts in bulk. Frank is eligible to treat inventory as non-incidental materials and elects to do so. In December of 2019 he purchases 24 oil filters. He uses one to repair an auto in January 2020, and then about 2 per month and ends 2020 with 14 filters. Explain how Frank will treat his oil filter inventory.
Air Compressors Inc. purchases compressor parts for its inventory from a supplier. The following transactions take place during the current year: A. On April 5, the company purchases 400 parts for $8.30 per part, on credit. Terms of the purchase are 4/ 10, n/30, invoice dated April 5. B. On May 5, Air Compressors does not pay the amount due and renegotiates with the supplier. The supplier agrees to $400 cash immediately as partial payment on note payable due, converting the debt owed into a short-term note, with a 7% annual interest rate, payable in three months from May 5. C. On August 5, Air Compressors pays its account in full. Record the journal entries to recognize the initial purchase, the conversion plus cash, and the payment.
Uptown Co. took a physical count of its inventory at year-end. In addition, it had to decide whether or not the following items should be added to this count. (a) Merchandise on hand had been sold but returned by customers for warranty work._______ (b) Uptown Co. sent merchandise out on a consignment basis just prior to the physical count.__ (c) Before year-end the company ordered merchandise on FOB destination. The merchandise was shipped by the supplier but had not been received at year-end.--------______ (d) Before year-end the company ordered merchandise on FOB shipping point terms. The merchandise was shipped the same day but had not been received._____ (e) Merchandise sold FOB shipping point at year-end was picked up by the freight co._____ Indicate which items should be added to (answer: yes) and which items should not be added to (answer: no) the year-end inventory count.
Gato Inc. had the following inventory situations to consider at January 31, its year-end.(a) Goods held on consignment for Steele Corp. since December 12.(b) Goods shipped on consignment to Logan Holdings Inc. on January 5.(c) Goods shipped to a customer, FOB destination, on January 29 that are still in transit.(d) Goods shipped to a customer, FOB shipping point, on January 29 that are still in transit.(e) Goods purchased FOB destination from a supplier on January 25 that are still in transit.(f) Goods purchased FOB shipping point from a supplier on January 25 that are still intransit.(g) Office supplies on hand at January 31. InstructionsIdentify which of the preceding items should be included in inventory. If the item should not be included in inventory, state in what account, if any, it should have been recorded
The ABC sole proprietorship deals with the trade of IT items and the provision of related services. Carry out the adjustment entries of the accounts for the fiscal year 20X6 as well as those for the determination of the gross profit taking into account the following information: For the accounting of inventories, the company applies a periodic inventory and evaluates the inventories using the weighted average cost method. The company trades the kind P. The initial inventory consists of 20 units with a purchase price of € 50 per unit. In the fiscal year, 20X6 bought 80 units for € 55 per unit and 80 units for € 60 per unit. In the inventory of 31/12/20X6, the stocks in the warehouse consist of 30 units whose liquidation price amounts to € 55 per unit. Total gross merchandise sales amounted to €45,000 and sales returns to €400. During the 20x6 fiscal year, the company had purchased $1,000 at a $200 exchange rate= € 1. On 31/12/20X6, the current USD exchange rate is $1 =€ 1.2. The…
Skysong Limited is trying to determine the value of its ending inventory as of February 28, 2020, the company’s year-end. The following transactions occurred, and the accountant asked your help in determining whether they should be recorded or not.For each of the transactions below, specify whether the item in question should be included in ending inventory, and if so, at what amount. (a) On February 26, Skysong shipped goods costing $1,440 to a customer and charged the customer $1,800. The goods were shipped with terms FOB shipping point and the receiving report indicates that the customer received the goods on March 2. Included or Not Included $ (b) On February 26, Louis Inc. shipped goods to Skysong under terms FOB shipping point. The invoice price was $450 plus $40 for freight. The receiving report indicates that the goods were received by Skysong on March 2.…
Hampton Co. took a physical count of its inventory on December 31. In addition, it had to decide whether or not the following items should be added to this count. (a) Merchandise on hand had been sold earlier in the year but had been returned by customers for various warranty repairs. (b) Hampton Co. sent merchandise on a consignment basis on December 31 just prior to the physical count. (c) On December 22, Hampton Co. ordered merchandise on FOB destination terms. The merchandise was shipped by the supplier on December 30 but had not been received by December 31. (d) On December 27, Hampton Co. ordered merchandise on FOB shipping point terms. The merchandise was shipped on December 29 but had not been received by December 31. (e) Merchandise sold FOB shipping point on December 31 was picked up by the freight company just before closing on December 31. (f) Merchandise shipped to a customer FOB shipping point was picked up by the freight company on December 28 but had…