The December 31, 2021, year-end inventory balance of the Raymond Corporation is $234,000. You have been asked to review the following transactions to determine if they have been correctly recorded. 1. Goods shipped to Raymond f.o.b. destination on December 26, 2021, were received on January 2, 2022. The invoice cost of $42,000 is included in the preliminary inventory balance. 2. At year-end, Raymond held $26,000 of merchandise on consignment from the Harrison Company. This merchandise is included in the preliminary inventory balance. 3. On December 29, merchandise costing $7,200 was shipped to a customer f.o.b. shipping point and arrived at the customer's location on January 3, 2022. The merchandise is not included in the preliminary inventory balance. 4. At year-end, Raymond had merchandise costing $27,000 on consignment with the Joclyn Corporation. The merchandise is not included in the preliminary inventory balance. Required: Determine the correct inventory amount to be reported in Raymond's 2021 balance sheet.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
![Exercise 8-7 (Algo) Goods in transit; consignment [LO8-2]
The December 31, 2021, year-end inventory balance of the Raymond Corporation is $234,000. You have been asked to review the
following transactions to determine if they have been correctly recorded.
1. Goods shipped to Raymond f.o.b. destination on December 26, 2021, were received on January 2, 2022. The invoice cost of
$42,000 is included in the preliminary inventory balance.
2. At year-end, Raymond held $26,000 of merchandise on consignment from the Harrison Company. This merchandise is included in
the preliminary inventory balance.
3. On December 29, merchandise costing $7,200 was shipped to a customer f.o.b. shipping point and arrived at the customer's
location on January 3, 2022. The merchandise is not included in the preliminary inventory balance.
4. At year-end, Raymond had merchandise costing $27,000 on consignment with the Joclyn Corporation. The merchandise is not
included in the preliminary inventory balance.
Required:
Determine the correct inventory amount to be reported in Raymond's 2021 balance sheet.
Answer is complete but not entirely correct.
Correct inventory balance
151,000 X](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3e1bfd6a-3cb6-4031-858f-4ba8da8545b1%2Fadaebdca-de6d-4c6c-a8e5-63d8065e374c%2Fwrsd9m7_processed.jpeg&w=3840&q=75)
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