The December 31, 2024, inventory of Tog Company, based on a physical count, was determined count was a shipment of goods received from a supplier at the end of the month that cost $60,000. The purchase was recorded a paid for in 2025. Another supplier shipment costing $25,000 was correctly recorded as a purchase in 2024. However, the merchandise, shipped FOB shipping point, was not received until 2025 and was incorrectly omitted from the physical count. A thire purchase, shipped from a supplier FOB shipping point on December 28, 2024, did not arrive until January 3, 2025. The merchandi which cost $90,000, was not included in the physical count and the purchase has not yet been recorded. The company uses a periodic inventory system. Required:

The December 31, 2024, inventory of Tog Company, based on a physical count, was determined count was a shipment of goods received from a supplier at the end of the month that cost $60,000. The purchase was recorded a paid for in 2025. Another supplier shipment costing $25,000 was correctly recorded as a purchase in 2024. However, the merchandise, shipped FOB shipping point, was not received until 2025 and was incorrectly omitted from the physical count. A thire purchase, shipped from a supplier FOB shipping point on December 28, 2024, did not arrive until January 3, 2025. The merchandi which cost $90,000, was not included in the physical count and the purchase has not yet been recorded. The company uses a periodic inventory system. Required:

Name: Required 1 Required 2.Determine the correct December 31, 2024, invent
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Description: Required 1 Required 2.Determine the correct December 31, 2024, inventory balance and, assuming that the errors were discovered after the 2024financial statements were issued, analyze the effect of the errors on 2024 cost of goods sold, net income, a

FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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Question

Required 1 Required 2.
Determine the correct December 31, 2024, inventory balance and, assuming that the errors were discovered after the 2024
financial statements were issued, analyze the effect of the errors on 2024 cost of goods sold, net income, and retained
earnings. (Ignore income taxes.)
Correct ending inventory
Cost of goods sold
Net income
Retained earnings
Effect
Amount

The December 31, 2024, inventory of Tog Company, based on a physical count, was determined to be $460,000. Included in that
count was a shipment of goods received from a supplier at the end of the month that cost $60,000. The purchase was recorded and
paid for in 2025. Another supplier shipment costing $25,000 was correctly recorded as a purchase in 2024. However, the
merchandise, shipped FOB shipping point, was not received until 2025 and was incorrectly omitted from the physical count. A third
purchase, shipped from a supplier FOB shipping point on December 28, 2024, did not arrive until January 3, 2025. The merchandise.
which cost $90,000, was not included in the physical count and the purchase has not yet been recorded.
The company uses a periodic inventory system.
Required:
1. Determine the correct December 31, 2024, inventory balance and, assuming that the errors were discovered after the 2024
financial statements were issued, analyze the effect of the errors on 2024 cost of goods sold, net income, and retained earnings.
(Ignore income taxes)

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At December 31, 2025, suppose that Whispering Company's inventory records indicated a balance of $620000. Upon further investigation it was determined that this amount included the following: ▪ $127000 in inventory purchases made by Whispering shipped from the seller on December 27, 2025 terms FOB destination, but not due to be received until January 2, 2026 $70000 in goods sold by Whispering with terms FOB destination on December 27, 2025. The goods are not expected to reach their destination until January 6, 2026 $7000 of goods received on consignment from Sandra Company ■ What is Whispering's correct ending inventory balance at December 31, 2025? $493000 $486000 O $416000 O $613000 Save for Later Attempts: 0 of 1 used Submit Answer
A physical inventory count showed ABC Company had inventorycosting $428,000 on hand at December 31, 2025. This amountdid not include the following:1. Inventory costing $39,000 that was shipped to acustomer FOB shipping point on December 30, 2025.The inventory was expected to be received by thecustomer on January 3, 2026.2. Inventory costing $17,000 that was shipped to acustomer FOB destination point on December 29, 2025.The inventory was expected to be received by thecustomer on January 6, 2026.3. Inventory costing $26,000 that ABC Company hadpurchased from one of its suppliers. The goodswere shipped to ABC Company on December 31, 2025.ABC Company expects to receive the inventory onJanuary 4, 2026. The shipping terms were FOBshipping point.Calculate the correct dollar amount of ending inventoryto be reported on ABC Company’s December 31, 2025 balancesheet.
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