Ending inventory-as reported Included in the company's count were goods with a cost of $257,000 that the company is holding on consignment. The goods belong to Kroeger Corporation. 1. 2. The physical count did not include goods purchased by Waterway with a cost of $35,000 that were shipped FOB destination on December 28 and did not arrive at Waterway warehouse until January 3. Included in the inventory account was $10,000 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. 3. 4. 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 $49,000 and a cost of $38,000. The goods were not included in the count because they were sitting on the dock. On December 29, Waterway shipped goods with a selling price of $78,000 and a cost of $51,000 to Macchia Sales Corporation FOB shipping point. The goods arrived on January 3. Macchia had only ordered goods with a selling price of $15,000 and a cost of $8,000. However, a sales manager at Waterway had authorized the shipment and said that if Macchia wanted to ship the goods back next week, it could. 5. 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 Waterway'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." 6. Correct inventory

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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HOW DO I WORKOUT THIS PROBLEM?

Kari Downs, an auditor with Wheeler CPAs, is performing a review of Waterway Company’s inventory account. Waterway 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.

Prepare a schedule to determine the correct inventory amount.

2$
Ending inventory-as reported
Included in the company's count were goods with a cost of $257,000 that the company is
holding on consignment. The goods belong to Kroeger Corporation.
1.
2.
The physical count did not include goods purchased by Waterway with a cost of
$35,000 that were shipped FOB destination on December 28 and did not arrive at
Waterway warehouse until January 3.
Included in the inventory account was $10,000 of office supplies that were stored in the
warehouse and were to be used by the company's supervisors and managers during the
3.
coming year.
4.
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 $49,000 and a cost of $38,000. The goods were not included in the count
because they were sitting on the dock.
On December 29, Waterway shipped goods with a selling price of $78,000 and a cost of
$51,000 to Macchia Sales Corporation FOB shipping point. The goods arrived on January
3. Macchia had only ordered goods with a selling price of $15,000 and a cost of $8,000.
However, a sales manager at Waterway had authorized the shipment and said that if
Macchia wanted to ship the goods back next week, it could.
5.
Included in the count was $34,000 of goods that were parts for a machine that the
company no longer made. Given the high-tech nature of Waterway's products, it was
unlikely that these obsolete parts had any other use. However, management would prefer
to keep them on the books at cost, "since that is what we paid for them, after all"
6.
2$
Correct inventory

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