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lizable value. Required: For each item, (a)-(d), prepare the journal entry to correct the balances presently reported. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list <> To record the elimination of consignment inventory, which does not belong to SLC. 1 elong to 2 To record the rectification for recording $6,700 supplies as inventory. 3 To record the elimination of $9,700 cost of goods sold in

lizable value. Required: For each item, (a)-(d), prepare the journal entry to correct the balances presently reported. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list <> To record the elimination of consignment inventory, which does not belong to SLC. 1 elong to 2 To record the rectification for recording $6,700 supplies as inventory. 3 To record the elimination of $9,700 cost of goods sold in

FINANCIAL ACCOUNTING
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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1. To record the elimination of consignment inventory, which does not belong to SLC. 2. To record the rectification for recording $6,700 supplies as inventory. 3. To record the elimination of $9,700 cost of goods sold in December for a sale to be made in January. 4. To record the elimination of $18,400 sales transaction recorded in December for a sale to be made in January when goods are shipped FOB destination. 5. To record the write-down of $3,850 inventory damaged in December and will be scrapped in January, with zero realizable value. **Note:** - A green circle (●) indicates that a journal entry has been entered.
Transcribed Image Text:1. To record the elimination of consignment inventory, which does not belong to SLC. 2. To record the rectification for recording $6,700 supplies as inventory. 3. To record the elimination of $9,700 cost of goods sold in December for a sale to be made in January. 4. To record the elimination of $18,400 sales transaction recorded in December for a sale to be made in January when goods are shipped FOB destination. 5. To record the write-down of $3,850 inventory damaged in December and will be scrapped in January, with zero realizable value. **Note:** - A green circle (●) indicates that a journal entry has been entered.
**Seemore Lens Company Inventory Adjustment** The Seemore Lens Company (SLC) sells contact lenses with the terms FOB destination. For the year ending December 31, the company reported the following figures: - Inventory: $87,000 - Cost of Goods Sold: $454,000 **Adjustments to Inventory:** a. **Consignment Inventory**: - $13,400 of lenses included in Inventory are held on consignment. b. **Office Supplies**: - $6,700 of office supplies are incorrectly recorded as Inventory. c. **Pre-sold Lenses**: - $9,700 of lenses, ready to be shipped on January 2, were excluded from Inventory and reported as sold. d. **Damaged Lenses**: - $3,850 of damaged lenses included in Inventory will be scrapped, having zero realizable value. **Required Adjustments**: For each scenario, journal entries are necessary to correct the current reporting, unless specified otherwise. 1. **Entry for Consignment Inventory**: - **Action**: Eliminate $13,400 from Inventory as SLC does not own these items. 2. **Entry for Office Supplies**: - **Action**: Adjust inventory to remove $6,700 of office supplies mistakenly classified as Inventory. 3. **Entry for Pre-sold Lenses**: - **Action**: Update records to reflect the adjustment of $9,700 for lenses reported as sold in December but due for shipment in January. 4. **Entry for Damaged Lenses**: - **Action**: Remove $3,850 from Inventory for lenses that will be scrapped. **Note**: No journal entry is required if there is no impact on the financial statements from a transaction/event. This exercise illustrates the importance of accurate inventory accounting and the impact of consignment, misclassification, sales timing, and product damage on financial statements.
Transcribed Image Text:**Seemore Lens Company Inventory Adjustment** The Seemore Lens Company (SLC) sells contact lenses with the terms FOB destination. For the year ending December 31, the company reported the following figures: - Inventory: $87,000 - Cost of Goods Sold: $454,000 **Adjustments to Inventory:** a. **Consignment Inventory**: - $13,400 of lenses included in Inventory are held on consignment. b. **Office Supplies**: - $6,700 of office supplies are incorrectly recorded as Inventory. c. **Pre-sold Lenses**: - $9,700 of lenses, ready to be shipped on January 2, were excluded from Inventory and reported as sold. d. **Damaged Lenses**: - $3,850 of damaged lenses included in Inventory will be scrapped, having zero realizable value. **Required Adjustments**: For each scenario, journal entries are necessary to correct the current reporting, unless specified otherwise. 1. **Entry for Consignment Inventory**: - **Action**: Eliminate $13,400 from Inventory as SLC does not own these items. 2. **Entry for Office Supplies**: - **Action**: Adjust inventory to remove $6,700 of office supplies mistakenly classified as Inventory. 3. **Entry for Pre-sold Lenses**: - **Action**: Update records to reflect the adjustment of $9,700 for lenses reported as sold in December but due for shipment in January. 4. **Entry for Damaged Lenses**: - **Action**: Remove $3,850 from Inventory for lenses that will be scrapped. **Note**: No journal entry is required if there is no impact on the financial statements from a transaction/event. This exercise illustrates the importance of accurate inventory accounting and the impact of consignment, misclassification, sales timing, and product damage on financial statements.
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