Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 8, Problem 8.6BYP
Judgment Case 8–6
Goods in transit
• LO8–2
At the end of 2018, the Biggie Company performed its annual physical inventory count. John Lawrence, the manager in charge of the physical count, was told that an additional $22,000 in inventory that had been sold and was in transit to the customer should be included in the ending inventory balance. John was of the opinion that the merchandise shipped should be excluded from the ending inventory since Biggie was not in physical possession of the merchandise.
Required:
Discuss the situation and indicate why John’s opinion might be incorrect
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Students have asked these similar questions
PROBLEM 6-3 Counterbalancing Errors
Phcovered the following errors in connection with your examination of the
eancial statements of Girlie Corporation:
Purchase of merchandise on account on December 27, 2020 amounting to
PS0,000 was not recorded until it was paid in January 2021. The
merchandise was properly included in the ending inventory in 2020.
9 Sale of merchandise on account on December 29, 2020 amounting to P70,000
was not recorded until it was collected in January 2021. The merchandise
was properly excluded in the ending inventory in 2020.
1 On December 31, 2020, the ending inventory was understated by P20,000.
The following data were extracted from the financial statements of Girlie
Corporation:
2020
2021
Net income
Working capital
RE, end of the year
100,000
300,000
100,000
150,000
400,000
250,000
Questions:
Based on the above data, determine the following:
1. Net income in 2020
a. P140,000
b. P70,000
c. P50,000
d. P120,000
2 Working capital, end of 2020
a. P340,000
b.…
Question 19 of 34
On December 30, 2014, Fine Corporation sold merchandise for P75,000 to Day Company. The terms of the sale were n/30, FOB shipping point. The merchandise
was shipped on December 31, 2014, and arrived at Day Company on January 2, 2015. Due to a clerical error, the sale was not recorded until January 2015 and the
merchandise, sold at a 25% markup on cost, was included in Fine's inventory at December 31, 2014.
As a result, Fine's cost of goods sold for the year ended December 31, 2014 was-
Select the correct response:
Understated by P15,000
Understated by P60,000
Understated by P75,000
Correctly stated
MODLUE 5 INVENTORY PERIODIC
Please record the following transactions and explain your answer.
1) On June 7 sold inventory that had cost us $800 for $1,000 on account to Smith. Freight to get the merchandise to our customer was paid by the customer
2) Accepted a return of merchandise from the June 7 sale to Smith that was the wrong size for the customer. We had sold the merchandise for $300; our cost was $240.
3) Shipped merchandise that had cost us $940 to Jones. New Stuff billed the customer $1,175 on the sale and paid $25 in freight to get the merchandise to the customer.
4) Received a check for the Smith June 7 sale.
Chapter 8 Solutions
Intermediate Accounting
Ch. 8 - Describe the three types of inventory of a...Ch. 8 - What is the main difference between a perpetual...Ch. 8 - The Cloud Company employs a perpetual inventory...Ch. 8 - The Bockner Company shipped merchandise to Laetner...Ch. 8 - What is a consignment arrangement? Explain the...Ch. 8 - Prob. 8.6QCh. 8 - The Esquire Company employs a periodic inventory...Ch. 8 - Prob. 8.8QCh. 8 - Its common in the electronics industry for unit...Ch. 8 - Explain why proponents of LIFO argue that it...
Ch. 8 - Prob. 8.11QCh. 8 - Describe the ratios used by financial analysts to...Ch. 8 - Prob. 8.13QCh. 8 - Prob. 8.14QCh. 8 - The Austin Company uses the dollar-value LIFO...Ch. 8 - Identify any differences between U.S. GAAP and...Ch. 8 - Determining ending inventory; periodic system ...Ch. 8 - Prob. 8.2BECh. 8 - Prob. 8.3BECh. 8 - Purchas e discounts; gross method LO83 On...Ch. 8 - Prob. 8.5BECh. 8 - Prob. 8.6BECh. 8 - Inventor y cost flow methods; perpetual system ...Ch. 8 - LIFO method LO84 Esquire Inc. uses the LIFO...Ch. 8 - LIFO method LO84 AAA Hardware uses the LIFO...Ch. 8 - LIFO liquidation LO86 Refer to the situation...Ch. 8 - Prob. 8.11BECh. 8 - Ratio analysis LO87 Selected financial statement...Ch. 8 - Dollar-value LIFO LO88 At the beginning of 2018,...Ch. 8 - Perpetual inventory system; journal entries LO81...Ch. 8 - Prob. 8.2ECh. 8 - Determining cost of goods sold; periodic inventory...Ch. 8 - Perpetual and periodic inventory systems compared ...Ch. 8 - Prob. 8.6ECh. 8 - Goods in transit; consignment LO82 The December...Ch. 8 - Physical quantities and costs included in...Ch. 8 - Prob. 8.9ECh. 8 - Prob. 8.10ECh. 8 - Prob. 8.11ECh. 8 - FASB codification research LO82, LO83 Access the...Ch. 8 - Inventory cost flow methods; periodic system ...Ch. 8 - Inventory cost flow methods; perpetual system ...Ch. 8 - Comparison of FIFO and LIFO; periodic system ...Ch. 8 - Average cost method; periodic and perpetual...Ch. 8 - FIFO, LIFO, and average cost methods LO81, LO84...Ch. 8 - Supplemental LIFO disclosures; LIFO reserve; AEP...Ch. 8 - LIFO liquidation LO81, LO84, LO86 The Reuschel...Ch. 8 - Dollar-value LIFO LO88 On January 1, 2018, the...Ch. 8 - Dollar-value LIFO LO88 Mercury Company has only...Ch. 8 - Dollar-value LIFO LO88 Carswell Electronics...Ch. 8 - Concepts; terminology LO81 through LO85 Listed...Ch. 8 - Various inventory transactions; journal entries ...Ch. 8 - Prob. 8.2PCh. 8 - Prob. 8.4PCh. 8 - Various inventory costing methods LO81, LO84...Ch. 8 - Various inventory costing methods LO81, LO84...Ch. 8 - Supple mental LIFO disclosures; Caterpillar LO84,...Ch. 8 - LIFO liquidation LO84, LO86 Taylor Corporation...Ch. 8 - LIFO liquidation LO84, LO86 Cansela Corporation...Ch. 8 - Prob. 8.11PCh. 8 - Integrating problem; inventories and accounts...Ch. 8 - Dollar-value LIFO LO88 On January 1, 2018, the...Ch. 8 - Dollar-value LIFO LO88 Kingston Company uses the...Ch. 8 - Dollar-value LIFO LO88 On January 1, 2018,...Ch. 8 - Prob. 8.1BYPCh. 8 - Real World Case 82 Physical quantities and costs...Ch. 8 - Judgment Case 83 The specific identification...Ch. 8 - Prob. 8.4BYPCh. 8 - Prob. 8.5BYPCh. 8 - Judgment Case 86 Goods in transit LO82 At the end...Ch. 8 - Ethics Case 87 Profit manipulation LO84 In 2017...Ch. 8 - Real World Case 88 Effects of inventory valuation...Ch. 8 - Real World Case 89 Effects of inventory valuation...Ch. 8 - Communication Case 810 Dollar-value LIFO method ...Ch. 8 - Prob. 8.11BYPCh. 8 - Prob. 8.CCTCCh. 8 - Prob. CCIFRS
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