1-27. Examination of the records of Grand Company for the year ended December 31, 2019 revealed the following: Inventory at January 1, 2019 was overstated by P71,000 because some inventories were counted twice on December 31, 2018. Goods in transit from a supplier on December 31, 2019 under FOB shipping point were appropriately recorded as purchases but were not included in the physical count, P96,000. Grand recorded as sales a P60,000 invoice price of goods shipped to customers on December 30. P52,000, were in transit at December 31 and from the ending inventory. FOB shipping point, while the remaining goods were shipped FOB destination. The goods costing were excluded 60% of these goods were shipped Purchases of P100,000 were recorded when payment was made in 2019, although the goods were received in 2018 and were included in the 2018 ending inventory. Profit before income tax and before adjustments for the above items was P658,000. Chapter 1-Inventories REQUIRED: (a) Calculate the correct profit before income tax for 2019. 6t hefore

1-27. Examination of the records of Grand Company for the year ended December 31, 2019 revealed the following: Inventory at January 1, 2019 was overstated by P71,000 because some inventories were counted twice on December 31, 2018. Goods in transit from a supplier on December 31, 2019 under FOB shipping point were appropriately recorded as purchases but were not included in the physical count, P96,000. Grand recorded as sales a P60,000 invoice price of goods shipped to customers on December 30. P52,000, were in transit at December 31 and from the ending inventory. FOB shipping point, while the remaining goods were shipped FOB destination. The goods costing were excluded 60% of these goods were shipped Purchases of P100,000 were recorded when payment was made in 2019, although the goods were received in 2018 and were included in the 2018 ending inventory. Profit before income tax and before adjustments for the above items was P658,000. Chapter 1-Inventories REQUIRED: (a) Calculate the correct profit before income tax for 2019. 6t hefore

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Description: 1-27. Examination of the records of Grand Company for the year endedDecember 31, 2019 revealed the following:Inventory at January 1, 2019 was overstated by P71,000because some inventories were counted twice on December 31,2018.Goods in transit from

FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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Question

1-27. Examination of the records of Grand Company for the year ended
December 31, 2019 revealed the following:
Inventory at January 1, 2019 was overstated by P71,000
because some inventories were counted twice on December 31,
2018.
Goods in transit from a supplier on December 31, 2019 under
FOB shipping point were appropriately recorded as purchases
but were not included in the physical count, P96,000.
Grand recorded as sales a P60,000 invoice price of goods
shipped to customers on December 30.
P52,000, were in transit at December 31 and
from the ending inventory.
FOB shipping point, while the remaining goods were shipped
FOB destination.
The goods costing
were excluded
60% of these goods were shipped
Purchases of P100,000 were recorded when payment was ma
in 2019, although the goods were received in 2018 and were
included in the 2018 ending inventory.
Profit before income tax and before adiustments for the above
items was P658,000.
Chapter 1- Inventories
REQUIRED:
(a)
(b)
Calculate the correct profit before income tax for 2019.
Determine the net effect of the foregoing errors on profit before
income tax for the year 2018.
entrect

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A company's inventory on December 31, 2024, was $247,000 based on a physical count priced at cost, and before any necessary adjustment for the following: Inventory costing $ 12,000, shipped f.o. b. shipping point from a vendor on December 30, 2024, was received on January 5, 2025. Inventory costing $14, 000, shipped f.o. b. destination from a vendor on December 28, 2024, was received on January 3, 2025. Inventory costing $70,000 was shipped to a customer f.o. b. destination on December 28, arrived at the customer's location on January 6, 2025. Inventory costing $54,000 was being held on consignment by another company. What amount should the company report as inventory in its December 31, 2024, balance sheet? Please explain your answer in detail of why you included or excluded?
You have been assigned to examine the financial statements of PC corp. for the year ended December 31, 2021, as prepared following IFRS. You discover the following situations: 1. Physical inventory count on Dec 31, 2021, improperly included merchandise costing $3,800 that had been sold but not delivered until Jan 5, 2022. PC uses a periodic inventory system. 2. Depreciation of $1,700 for 2021 on delivery vehicles was not recorded. 3. A collection of $4,600 on account from a customer received on Dec 31, 2021, was not recorded. 4. At the beginning of 2020, the company purchased equipment for $225,000 (residual value $22,500) and had a useful life of 6 years. The accountant used straight-line amortization but failed to deduct the residual value in the calculation of the depreciation for 2020 and 2021. Instructions: Prepare the required journal entries (if any) to correct PC accounts, assuming each transaction is independent and assuming 2021 books are not closed.
[The following information applies to the questions displayed below.] Autumn Company began the month of October with inventory of $33,000. The following inventory transactions occurred during the month: The company purchased inventory on account for $49,000 on October 12. Terms of the purchase were 210/210 , n30/�30 . Autumn uses the net method to record purchases. The inventory was shipped f.o.b. shipping point and freight charges of $680 were paid in cash. On October 31, Autumn paid for the inventory purchased on October 12. During October inventory costing $20,700 was sold on account for $31,600. It was determined that inventory on hand at the end of October cost $61,000. 1. Assuming Autumn Company uses a perpetual inventory system, prepare journal entries for the above transactions. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.