Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:Kari Downs, an auditor with Wheeler CPAS, is performing a review of Swifty Company's inventory account. Swifty did not have a good
year, and top management is under pressure to boost reported income. According to its records, the inventory balance at year-end was
$747,000. However, the following information was not considered when determining that amount.
(a1) Prepare a schedule to determine the correct inventory amount. (If an amount reduces the account balance then enter with a negative
sign preceding the number, e.g. -15,000, or parenthesis e.g. (15,000). Enter O if there is no effect.)
1.
2.
3.
4.
5.
6.
Ending inventory-as reported
Included in the company's count were goods with a cost of $244,000 that the company is
holding on consignment. The goods belong to Kroeger Corporation.
The physical count did not include goods purchased by Swifty with a cost of $40,000 that
were shipped FOB destination on December 28 and did not arrive at Swifty warehouse
until January 3.
Included in the inventory account was $15,000 of office supplies that were stored in the
warehouse and were to be used by the company's supervisors and managers during the
coming year.
The company received an order on December 29 that was boxed and sitting on the loading
dock awaiting pick-up on December 31. The shipper picked up the goods on January 1 and
delivered them on January 6. The shipping terms were FOB shipping point. The goods had a
selling price of $36,000 and a cost of $22,000. The goods were not included in the count
because they were sitting on the dock.
On December 29, Swifty shipped goods with a selling price of $80,000 and a cost of
$65,000 to Macchia Sales Corporation FOB shipping point. The goods arrived on January 3.
Macchia had only ordered goods with a selling price of $12,000 and a cost of $8,000.
However, a sales manager at Swifty had authorized the shipment and said that if Machia
wanted to ship the goods back next week, it could.
Included in the count was $34,000 of goods that were parts for a machine that the company
no longer made. Given the high-tech nature of Swifty's products, it was unlikely that these
obsolete parts had any other use. However, management would prefer to keep them on the
books at cost, "since that is what we paid for them, after all."
Correct inventory
$
$
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 1 images
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education