You were engaged to perform an audit of the accounts of the Fontana Blue Corporation for the year ended December 31, 2021, and have observed the taking of the physical inventory of the company on December 29, 2021. Only merchandise shipped by the Fontana Blue Corporation to customers up to and including December 29, 2021 have been eliminated from inventory. The inventory as determined by physical inventory count has been recorded in the books by the company's controller. No perpetual inventory records are maintained. All sales are made on an FOB shipping point basis. You are to assume that all purchase invoices have been correctly recorded. The following lists of sales invoices are entered in the sales books for the months of December, 2021 and January, 2022, respectively. Sales Invoice Sales Invoice Cost of Goods Amount Date Sold Date Shipped 20,000 18,000 December, 2021 a 30,000 Dec. 21 31-Dec-21 b 2,200 Dec. 31 31-Dec-21 10,000 Dec. 29 6,000 30-Dec-21 d 40,000 Dec. 31 24,000 03-Jan-22 e 100,000 Dec. 30 56,000 29-Dec-21 (shipped to consignee )* f 120,000 Dec. 30 80,000 02-Jan-22 January, 2022 60,000 Dec. 31 40,000 30-Dec-21 40,000 Jan. 2 23,000 02-Jan-22 i 80,000 Jan. 3 55,000 31-Dec-21 j 90,000 Jan. 4 64,000 29-Dec-21 *Verification from the consignee indicates that 60% of the merchandise is still unsold at December 31, 2021.
You were engaged to perform an audit of the accounts of the Fontana Blue Corporation for the year ended December 31, 2021, and have observed the taking of the physical inventory of the company on December 29, 2021. Only merchandise shipped by the Fontana Blue Corporation to customers up to and including December 29, 2021 have been eliminated from inventory. The inventory as determined by physical inventory count has been recorded in the books by the company's controller. No perpetual inventory records are maintained. All sales are made on an FOB shipping point basis. You are to assume that all purchase invoices have been correctly recorded. The following lists of sales invoices are entered in the sales books for the months of December, 2021 and January, 2022, respectively. Sales Invoice Sales Invoice Cost of Goods Amount Date Sold Date Shipped 20,000 18,000 December, 2021 a 30,000 Dec. 21 31-Dec-21 b 2,200 Dec. 31 31-Dec-21 10,000 Dec. 29 6,000 30-Dec-21 d 40,000 Dec. 31 24,000 03-Jan-22 e 100,000 Dec. 30 56,000 29-Dec-21 (shipped to consignee )* f 120,000 Dec. 30 80,000 02-Jan-22 January, 2022 60,000 Dec. 31 40,000 30-Dec-21 40,000 Jan. 2 23,000 02-Jan-22 i 80,000 Jan. 3 55,000 31-Dec-21 j 90,000 Jan. 4 64,000 29-Dec-21 *Verification from the consignee indicates that 60% of the merchandise is still unsold at December 31, 2021.
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter9: Working Capital
Section: Chapter Questions
Problem 23E
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Transcribed Image Text:Problem 2
You were engaged to perform an audit of the accounts of the Fontana Blue Corporation for the
year ended December 31, 2021, and have observed the taking of the physical inventory of the
company on December 29, 2021. Only merchandise shipped by the Fontana Blue Corporation to
customers up to and including December 29, 2021 have been eliminated from inventory. The
inventory as determined by physical inventory count has been recorded in the books by the
company's controller. No perpetual inventory records are maintained. All sales are made on an
FOB shipping point basis. You are to assume that all purchase invoices have been correctly
recorded.
The following lists of sales invoices are entered in the sales books for the months of December,
2021 and January, 2022, respectively.
Sales Invoice
Sales Invoice
Cost of Goods
Amount
Date
Sold
Date Shipped
December, 2021 a
30,000 Dec. 21
20,000
31-Dec-21
2,200 Dec. 31
18,000
31-Dec-21
10,000 Dec. 29
6,000
30-Dec-21
d
40,000 Dec. 31
24,000
03-Jan-22
e
100,000 Dec. 30
56,000
29-Dec-21
(shipped to consignee )*
120,000 Dec. 30
80,000
02-Jan-22
January, 2022
60,000 Dec. 31
40,000
30-Dec-21
40,000 Jan. 2
23,000
02-Jan-22
80,000 Jan. 3
55,000
31-Dec-21
j
90,000 Jan. 4
64,000
29-Dec-21
*Verification from the consignee indicates that 60% of the merchandise is still unsold at December
31, 2021.
REQUIRED:
Prepare the necessary adjusting journal entries at December 31, 2021 in connection with the
foregoing information.
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