Concept explainers
F.O.B (Free On Board) Shipping Point: Under this system, the responsibility of the seller over the goods ends once the goods are out of the warehouse. The buyer takes the responsibility of the delivery of the goods to his/her location. The legal title of the goods is transferred from the seller to the buyer, once the goods are out of the seller’s warehouse, regardless to the goods reached at buyer’s location.
F.O.B Destination Point: Under this system, the seller is responsible for the transfer of the goods from the warehouse to the customer’s destination. The legal title of the goods is transferred from the seller to the buyer, once the goods are delivered at the buyer’s place.
To find: the shipments that should be included in K’s December 31 inventory.
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Chapter 8 Solutions
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- PROBLEM 13 Suzie, Inc. had 10,200 units on April 30, 2021, based on physical count of goods on that date. The following items have not yet been recorded as purchases and sales as of April 30. No. 1 2 3 Transaction Purchase Purchase Sale Sale Terms FOB shipping point FOB destination FOB shipping point FOB destination Number of units 250 300 650 500 Items 1-4 were shipped by the seller April 30, 2021 and received by the buyer May 5, 2021. Explain the units sold considering the invnetory end of April 2021arrow_forward( Appendix 6B) Refer to the information for Morgan Inc. above. If Morgan uses a periodic inventory system, what is the cost of goods sold under FIFO at April 30? a. $32,800 b. $38,400 c. $63,600 d. $69,200arrow_forwardCost of merchandise sold and related items The following data were extracted from the accounting records of Harkins Company for the year ended April 30, 2016: Merchandise inventory. May 1, 2015 380,000 Merchandise inventory, April 30,2016 415,000 Purchases 3,800,000 Purchases returns and allowances 150,000 Purchases discounts 80,000 Sales 5,850,000 Freight in 16,600 a. Prepare the cost of merchandise sold section of the income statement for the year ended April 30, 2016, using the periodic inventory system. b. Determine the gross profit to be reported on the income statement for the year ended April 30, 2016. c. Would gross profit be different if the perpetual inventory system was used instead of the periodic inventory' system?arrow_forward
- Chapter 5 Problems Sales-related transactions using perpetual inventory system. The following selected transactions were completed by Amsterdam Supply Co., which sells office supplies primarily to wholesalers and occasionally to retail customers: Mar. 2. Sold merchandise on account to Equinox Co., $18,900, terms FOB destination, 1/10, n/30. The cost of the merchandise sold was $13,300. Sold merchandise for $11,350 plus 6% sales tax to retail cash customers. The cost of merchandise sold was $7,000. Sold merchandise on account to Empire Co., $55,400, terms FOB shipping point, n/eom. The cost of merchandise sold was $33,200. Sold merchandise for $30,000 plus 6% sales tax to retail customers who used MasterCard. The cost of merchandise sold was $19,400. Received check for amount due from Equinox Co. for sale on March 2. Sold merchandise to customers who used American Express cards, $13,700. The cost of merchandise sold was $8,350. Sold merchandise on account to Targhee Co., $27,500, terms…arrow_forward23-A wholesaler sold merchandise inventory with in invoice price RO 16,000 to the customer of business and credit terms are 3/10, n/60. What is the net cost of the goods sold assuming that if the retailer made the payment within the discount period? a. RO 16,000 b. RO 480 c. RO 14,400 d. RO 15,520arrow_forwardProblem #11 Transportation Costs On June 16, 2021, llano sold merchandise to Pascual for P6,000, terms 2/10, n/30. Shipping costs were P600. Pascual received the goods and llano's invoice on June 17. On June 24, Pascual sent the payment to llano, which llano received on June 25. Both lano and Pascual use the periodic inventory system. The following are several arrangements regarding the shipping costs: a. Shipping terms are F.O.B. shipping point, freight collect. Pascual paid the shipping costs on June 17 and remitted P5,880 on June 24. Required: 1. Prepare the entries for llano to record the sale and the cash receipt. 2. Prepare the entries for Pascual to record the purchase, the payment of shipping costs, and the cash remittance. b. Shipping terms are F.O.B. destination, freight prepaid. llano paid the shipping costs on June 16. Pascual remitted P5,880 on June 24. Required: 1. Prepare the entries for llano to record the sale, the payment of shipping costs, and the cash receipt. 2.…arrow_forward
- Question 19 of 34 On December 30, 2014, Fine Corporation sold merchandise for P75,000 to Day Company. The terms of the sale were n/30, FOB shipping point. The merchandise was shipped on December 31, 2014, and arrived at Day Company on January 2, 2015. Due to a clerical error, the sale was not recorded until January 2015 and the merchandise, sold at a 25% markup on cost, was included in Fine's inventory at December 31, 2014. As a result, Fine's cost of goods sold for the year ended December 31, 2014 was- Select the correct response: Understated by P15,000 Understated by P60,000 Understated by P75,000 Correctly statedarrow_forward20/Renolta traders purchased goods on 7th April, 2018 for RO 78,000 on credit under the payment terms 3/10, n/30 and paid cash on 15th April, 2018. How would you record this in the books of buyer under perpetual inventory system? a. Account payable RO 78,000 Dr / Merchandise inventory RO 2,340 Cr / Cash RO 75,660 Cr b. Account payable RO 78,000 Dr / Cash RO 78,000 Cr c. Cash RO 75,660 Dr / Merchandise inventory RO 2,340 Dr /Account payable RO 78,000 Cr d. Cash RO 78,000 Dr / Account payable RO 78,000 Crarrow_forwardΒΔ Moving to Question 7 Bahrain Company made the following merchandise purchases and sales during the April, 2021: April 1 The beginning inventory balance 400 units at $30 each. Sold 250 units at $40 each. April 4 April 14 Purchased 300 units at $ 32 each. Sold 300 units at $ 50 each. April 28 Answer the following questions assuming that the company uses the First IN First Out (FIFO) method. Note: Write only the final amount - Do not show your calculation 1) What is Cost of goods sold on April 4? 2) What is the inventory balance on April 4? 3) What is the total cost of merchandise purchased on April 14? 4) What is the inventory balance on April 14? 5) What is the Cost of goods sold on April 28? 6) What is the inventory balance on April 28?arrow_forward
- sh16 Abbey Co. sold merchandise to Gomez Co. on account, $34,000, terms 2/15, n/45. The cost of the goods sold was $14,693. Abbey Co. issued a credit memo for $4,100 for merchandise returned that originally cost $1,189. What is the amount of gross profit earned by Abbey Co. on these transactions? a.$13,504 b.$19,816 c.$16,396 d.$4,100arrow_forwardQuestion 1 of 6View PoliciesCurrent Attempt in ProgressThe following are selected transactions of Kingbird Company. Kingbird sells in large quantities to other companies and also sells itsproduct in a small retail outlet.March 131531-/1 = :Sold merchandise on account to Dodson Company for $10,600, terms 2/10, n/30.Dodson Company returned merchandise with a sales price of $600 to Kingbird.Kingbird collected the amount due from Dodson Company from the March 1 sale.Kingbird sold merchandise for $600 in its retail outlet. The customer used his Kingbird credit card.Kingbird added 2.0% monthly interest to the customer's credit card balance.Prepare journal entries for the transactions above. (Ignore cost of goods sold entries and explanations.) (Credit account titles areautomatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)arrow_forward19-A Retailer purchased merchandise inventory with an invoice price of RO 80,000 and credit terms are 2/10, n/30. What is the net cost of the goods assuming that if the retailer made the payment within the discount period? a. RO 72,000 b. RO 78,400 c. RO 80,000 d. RO 1600arrow_forward
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