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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.
the correct inventory amount to be reported in K’s 2018
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Chapter 8 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/CONNECT
- Problem 10-23 (IAA) A physical count on December 31, 2021 revealed that Joy Company had inventory with a cost of P4,410,000. The following items were excluded from this amount: • Merchandise of P610,000 is held by Joy Company on consignment. • Merchandise costing P380,000 was shipped by Joy Company FOB destination to a customer on December 31, 2021. The customer was expected to receive the goods on January 5, 2022. * Merchandise costing P460,000 was shipped by Joy Company FOB shipping point to a customer on December 29, 2021. The customer was expected to receive the goods on January 10, 2022. Merchandise costing P830,000 ahipped by a vendor FOB destination on December 31, 2021 was received by Joy Company on January 15, 2022. Merchandise costing P510,000 purchased FOB shipping point was shipped by the supplier on December 31, 2021 and received by Joy on January 5, 2022. What amount of inventory ahould be reported on December 31, 2021? a. 5,300,000 b. 4,690,000 e. 3,800,000 d. 4,920,000arrow_forwardInventory, January 1, 2022 Purchases c. $69,000 d. $61,000 Purchase returns Purchase discounts Freight-in Inventory, December 31, 2022 Freight-out $25,000 35,000 2,000 4,000 5,000 10,000 6,000 Given this information, the cost of merchandise available for sale during 2022 is a. $65,000 b. $59,000arrow_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_forward
- Problem #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_forwardMC42 The following data is available for Corona Trading: Cost P 47,075 213,327 3,400 Retail P 70,025 306,375 Inventory, January 1 Purchases (net) Freight in Sales Additional markups Cancellation of additional markups 320,500 18,900 7,800 10,640 Markdowns Physical inventory, December 31, at retail 39,390 Corona Trading uses the average retail method. What is the cost of goods sold before loss on inventory shortage? P248,355 P231,798 P225,175 P224,350 a. b. с. d.arrow_forwardPROBLEM 15 Examination of the records of Hopper Company for the year ended December 31, 2021 revealed the following: • Inventory at January 1, 2021 was overstated by P71,000. • Inventory at December 31, 2021 was understated by P96,000. • During 2021, Hopper received a P60,000 cash advance from a customer for merchandise to be manufactured and shipped during 2022. The P60,000 was credited to sales revenue. • Profit (before adjustments) reported on the 2021 profit or loss was P658,000. Explain the right profit for 2021arrow_forward
- Question 12 of 13 -/1 E View Policies Current Attempt in Progress Tamarisk Hardware reported cost of goods sold as follows. 2021 2022 Beginning inventory $ 23,000 $ 34,000 Cost of goods purchased 150,000 182,500 Cost of goods available for sale 173,000 216,500 Less: Ending inventory 34,000 37,500 Cost of goods sold $139,000 $179,000 Tamarisk made two errors: (1) 2021 ending inventory was overstated by $3,550, and (2) 2022 ending inventory was understated by $6,600. Compute the correct cost of goods sold for each year. 2021 2022 Cost of goods sold 2$ eTextbook and Media Save for Later Attempts: unlimited Submit Answerarrow_forwardExercise 6-13 Estimating ending inventory-retail method LO6 During 2023, Harmony Co. sold $522,000 of merchandise at marked retail prices. At the end of 2023, the following information was available from its records: Beginning inventory Net purchases At Cost At Retail $129,600 $258,800 233,240 395,600 Use the retail method to estimate Harmony's 2023 ending inventory at cost. (Round your intermediate and final answers to 2 decimal places.) Ending inventory پاسےarrow_forwardPROBLEM 12 The book value of the Chrissy Trading's inventory at the end of 2021 is P9,500,000. Included in the amount are the following items: • Merchandise in transit, purchased FOB shipping point P680,000. • Goods held on consignment, P500,000. • Goods out on consignment, at cost plus 50% markup on cost plus P10,000 delivery charge, P610,000 explain how to get the inventoryarrow_forward
- QUESTION 1 On 5 December 2021, J Mart bought merchandise on account from Jerai Ria. The selling price of the goods was RM15,000, and the cost to Jerai Ria was RM8,000. On 8 December 2022, J Mart returned defective goods with a selling price of RM2,000, and the cost was RM300. REQUIRED: Record the transactions for Jerai Ria under the perpetual inventory system.arrow_forwardProblem 13-11 (IAA) Fairy Company provided the following information: 2020 2021 Sales Beginning inventory Purchases Freight in Purchase discounts Purchase returns Purchase allowances Ending inventory 7,500,000 1,260,000 6,450,000 350,000 90,000 120,000 20,000 2,355,000 4,500,000 3,180,000 220,000 45,000 40,000 15,000 What amount should be reported as inventory on December 31, 2021? a. 2,370,000 b. 2,025,000 c. 3,285,000 d. 2,505,000 07arrow_forwardPROBLEM 17 On January 15, 2020, a strong monsoon hit the country and destroyed all the inventory of Aeirron Company stored in the warehouse. The following information is available from the records of the company's periodic inventory system: ww Beginning inventory Purchases, January1 to January 15, 2020 Sales, January 1 to January 15, 2020 P1,000.000 500,000 800,000 The following are the past performance of Aeirron Company: 2019 2018 Sales P4,500,000 P4,100,000 Cost of Sales 2,300,000 2,500,000 Requirements: 1. Compute the gross profit rate of the company for the pastyears. 2. Compute the inventory lost in monsoon.arrow_forward
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