INTERMEDIATE ACCOUNTING(LL)-W/CONNECT
9th Edition
ISBN: 9781260216141
Author: SPICELAND
Publisher: MCG CUSTOM
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Chapter 9, Problem 9.17P
Integrating problem; Chapters 8 and 9; inventory errors
• LO9–7
Capwell Corporation uses a periodic inventory system. The company’s ending inventory on December 31, 2018, its fiscal-year end, based on a physical count, was determined to be $326,000. Capwell’s unadjusted
The internal audit department discovered the following items:
- 1. Goods valued at $32,000 held on consignment from Dix Company were included in the physical count but not recorded as a purchase.
- 2. Purchases from Xavier Corporation were incorrectly recorded at $41,000 instead of the correct amount of $14,000. The correct amount was included in the ending inventory.
- 3. Goods that cost $25,000 were shipped from a vendor on December 28, 2018, terms f.o.b. destination. The merchandise arrived on January 3, 2019. The purchase and related accounts payable were recorded in 2018.
- 4. One inventory item was incorrectly included in ending inventory as 100 units, instead of the correct amount of 1,000 units. This item cost $40 per unit.
- 5. The 2017 balance sheet reported inventory of $352,000. The internal auditors discovered that a mathematical error caused this inventory to be understated by $62,000. This amount is considered to be material. Comparative financial statements will be issued.
- 6. Goods shipped to a customer f.o.b. destination on December 25, 2018, were received by the customer on January 4, 2019. The sales price was $40,000 and the merchandise cost $22,000. The sale and corresponding accounts receivable were recorded in 2018.
- 7. Goods shipped from a vendor f.o.b. shipping point on December 27, 2018, were received on January 3, 2019. The merchandise cost $18,000. The purchase was not recorded until 2019.
Required:
- 1. Determine the correct amounts for 2018 purchases, accounts payable, sales revenue, and accounts receivable.
- 2. Calculate ending inventory and cost of goods sold for 2018.
- 3. Describe the steps Capwell would undertake to correct the error in the 2017 ending inventory. What was the effect of the error on 2017 before-tax income?
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8:36 1
2. The estimated cost of the inventory sold
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Open T accounts and enter the balances for the
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Answer |
E 14-11A Journalize Adjusting Entry for
Inventory Shrinkage: Perpetual
Inventory System
(LO5) On December 31, Anup Enterprises
completed a physical count of its inventory.
Although the merchandise inventory account
shows a balance of $350,000, the physical
count comes to $325,000. Prepare the
appropriate adjusting entry under the perpetual
inventory system.
Series A Problems
P 14-12A Preparation of Adjustments on
a Spreadsheet for a Merchandising
Business: Periodic Method
(LO1/2/3/4) The trial balance for the Venice
Beach Kite Shop, a business owned by Molly
Young is shown belowon page 552. Year-end
adjustment information is as follows:
(a, A physical count shows that merchandise
b)
inventory costing $85,000 is on hand as of
December 31, 20--.
(c,…
4
ces
Required information
P7-3 (Algo) Evaluating Four Alternative Inventory Methods
Based on Income and Cash Flow LO7-2, 7-3
[The following information applies to the questions displayed below.]
At the end of January of the current year, the records of Donner
Company showed the following for a particular item that sold at $17.80
per unit:
Transactions
Inventory, January 1
Purchase, January 12
Purchase, January 26
Sale
Sale
P7-3 Part 4
Units
700
670
230
(560)
(200)
Amount
$2,450
3,685
1,725
4. Between FIFO or LIFO, which method would produce the more favorable cash flow?
PROBLEM 6: XXX Company is preparing its 2021 financial statements. Prior to any adjustments, inventory is valued at P1,605,000. The following information has been found relating to certaininventory transactions from your cut-off test:
A. Goods valued at P110,000 are on consignment with a customer. These goods werenot included in the ending inventory figure.
B.Goods costing P87,000 were received from a vendor on January 5, 2022. The relatedinvoice was received and recorded on January 12, 2022. The goods were shippedonDecember 31, 2021, terms FOB shipping point.
C. Goods costing P85,000, sold for P102,000, were shipped on December 31, 2021, andwere delivered to the customer on January 2, 2022. The terms of the invoice wereFOBshipping point. The goods were included in the ending inventory for 2021 and thesalewas recorded in 2022.
D. A P35,000 shipment of goods to a customer on December 31, terms FOB destinationwas not included in the year-end inventory. The goods cost P26,000…
Chapter 9 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/CONNECT
Ch. 9 - Explain the (a) lower of cost or net realizable...Ch. 9 - What are the various levels of aggregation to...Ch. 9 - Describe the alternative approaches for recording...Ch. 9 - Explain the gross profit method of estimating...Ch. 9 - The Rider Company uses the gross profit method to...Ch. 9 - Explain the retail inventory method of estimating...Ch. 9 - Both the gross profit method and the retail...Ch. 9 - Define each of the following retail terms: initial...Ch. 9 - Explain how to estimate the average cost of...Ch. 9 - Prob. 9.10Q
Ch. 9 - Explain the LIFO retail inventory method.Ch. 9 - Discuss the treatment of freight-in, net markups,...Ch. 9 - Explain the difference between the retail...Ch. 9 - Prob. 9.14QCh. 9 - Prob. 9.15QCh. 9 - Explain the accounting treatment of material...Ch. 9 - It is discovered in 2018 that ending inventory in...Ch. 9 - Identify any differences between U.S. GAAP and...Ch. 9 - (Based on Appendix 9) Define purchase commitments....Ch. 9 - (Based on Appendix 9) Explain how purchase...Ch. 9 - Lower of cost or net realizable value LO91 Ross...Ch. 9 - Lower of cost or net realizable value LO91 SLR...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.5BECh. 9 - Gross profit method; solving for unknown LO92...Ch. 9 - Retail inventory method; average cost LO93 Kiddie...Ch. 9 - Retail inventory method; LIFO LO93 Refer to the...Ch. 9 - Conventional retail method LO94 Refer to the...Ch. 9 - Conventional retail method LO94 Roberson...Ch. 9 - Dollar-value LIFO retail LO95 On January 1, 2018,...Ch. 9 - Dollar-value LIFO retail LO95 This exercise is a...Ch. 9 - Change i n inventory costing methods LO96 In...Ch. 9 - Change in inventory costing methods LO96 In 2018,...Ch. 9 - Inventory error LO97 In 2018, Winslow...Ch. 9 - Inventory error LO97 Refer to the situation...Ch. 9 - Lower of cost or net realizable value LO91 Herman...Ch. 9 - Lower of cost or net realizable value LO91 The...Ch. 9 - Lower of cost or net realizable value LO91 Tatum...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.8ECh. 9 - Prob. 9.9ECh. 9 - Prob. 9.10ECh. 9 - Gross profit method LO92 Royal Gorge Company uses...Ch. 9 - Prob. 9.12ECh. 9 - Retail inventory method; average cost LO93 San...Ch. 9 - Prob. 9.14ECh. 9 - Retail inventory method; LIFO LO93 Crosby Company...Ch. 9 - Prob. 9.16ECh. 9 - Conventional retail method; employee discounts ...Ch. 9 - Retail inventory method; solving for unknowns ...Ch. 9 - Dollar-value LIFO retail LO95 On January 1, 2018,...Ch. 9 - Prob. 9.20ECh. 9 - Dollar-value LIFO retail LO95 Lance-Hefner...Ch. 9 - Prob. 9.22ECh. 9 - Change in inventory costing methods LO96 In 2018,...Ch. 9 - Prob. 9.24ECh. 9 - Error correction; inventory error LO97 During...Ch. 9 - Prob. 9.26ECh. 9 - Inventory error LO97 In 2018, the internal...Ch. 9 - Inventory errors LO97 In 2018, the controller of...Ch. 9 - Concepts; terminology LO91 through LO97 Listed...Ch. 9 - Prob. 9.30ECh. 9 - Prob. 9.31ECh. 9 - Lower of cost or net realizable value LO91 Decker...Ch. 9 - Prob. 9.2PCh. 9 - Lower of cost or market LO91 Forester Company has...Ch. 9 - Prob. 9.4PCh. 9 - Prob. 9.5PCh. 9 - Prob. 9.6PCh. 9 - Retail inventory method; conventional and LIFO ...Ch. 9 - Prob. 9.8PCh. 9 - Prob. 9.9PCh. 9 - Dollar-value LIFO retail method LO95 [This is a...Ch. 9 - Dollar-value LIFO retail LO95 On January 1, 2018,...Ch. 9 - Retail inventory method; various applications ...Ch. 9 - Retail inventory method; various applications ...Ch. 9 - Prob. 9.14PCh. 9 - Inventory errors LO97 You have been hired as the...Ch. 9 - Inventory errors LO97 The December 31, 2018,...Ch. 9 - Integrating problem; Chapters 8 and 9; inventory...Ch. 9 - Purchase commitments Appendix In November 2018,...Ch. 9 - Judgment Case 91 Inventoriable costs; lower of...Ch. 9 - Integrating Case 93 FIFO and lower of cost or net...Ch. 9 - Prob. 9.4BYPCh. 9 - Prob. 9.5BYPCh. 9 - Prob. 9.6BYPCh. 9 - Prob. 9.7BYPCh. 9 - Real World Case 98 Various inventory issues;...Ch. 9 - Prob. 9.9BYPCh. 9 - Judgment Case 910 Inventory errors LO97 Some...Ch. 9 - Ethics Case 911 Overstatement of ending inventory ...Ch. 9 - Analysis Case 912 Purchase commitments Appendix...Ch. 9 - Continuing Cases Target Case LO93, LO94, LO95...Ch. 9 - Prob. 1CCIFRS
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