Costs : Assume that in an annual audit of Harlowe Inc. at December 31, 2014 , you find the following transactions near the closing date. 4) Merchandise received on January 5, 2015 , costing $680 was entered in the purchase journal on January 7, 2015. The invoice showed shipment was made f.o.b. supplier's warehouse on December 31, 2014. Because it was not on hand at December 28,2014, and the invoice was not included in inventory . 5) Merchandise costing $720 was received on December 28, 2014, and the invoice was not recorded. You located it in the hands of the purchasing agent ; it was marked " on consigmnet". Intructions : Assuming that wach of the amounts is material , state whether the merchandise should be included in the client's inventory , and give your reason for your decision on each item.
E8-3 Inventoriable Costs : Assume that in an annual audit of Harlowe Inc. at December 31, 2014 , you find the following transactions near the closing date.
4) Merchandise received on January 5, 2015 , costing $680 was entered in the purchase journal on January 7, 2015. The invoice showed shipment was made f.o.b. supplier's warehouse on December 31, 2014. Because it was not on hand at December 28,2014, and the invoice was not included in inventory .
5) Merchandise costing $720 was received on December 28, 2014, and the invoice was not recorded. You located it in the hands of the purchasing agent ; it was marked " on consigmnet".
Intructions : Assuming that wach of the amounts is material , state whether the merchandise should be included in the client's inventory , and give your reason for your decision on each item.
Inventory is recorded in the books as soon as it becomes the part of the business with all authorities.
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