Ch 8 Solutions

Ch 8 Solutions - SOLUTIONS TO EXERCISES EXERCISE 8-1 (1520...

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Unformatted text preview: SOLUTIONS TO EXERCISES EXERCISE 8-1 (1520 minutes) Items 2, 3, 5, 8, 10, 13, 14, 16, and 17 would be reported as inventory in the financial statements. The following items would not be reported as inventory: 1. Cost of goods sold in the income statement. 4. Not reported in the financial statements. 6. Cost of goods sold in the income statement. 7. Cost of goods sold in the income statement. 9. Interest expense in the income statement. 11. Advertising expense in the income statement. 12. Office supplies in the current assets section of the balance sheet. 15. Not reported in the financial statements. 18. Short-term investments in the current asset section of the balance sheet. EXERCISE 8-2 (1015 minutes) Inventory per physical count .................................................. $441,000 Goods in transit to customer, f.o.b. destination .................... + 33,000 Goods in transit from vendor, f.o.b. shipping point .............. Inventory to be reported on balance sheet ............................ + 51,000 $525,000 The consigned goods of $61,000 are not owned by Garza and were properly excluded. The goods in transit to a customer of $46,000, shipped f.o.b. shipping point, are properly excluded from the inventory because the title to the goods passed when they left the seller (Oliva) and therefore a sale and related cost of goods sold should be recorded in 2010. The goods in transit from a vendor of $73,000, shipped f.o.b. destination, are properly excluded from the inventory because the title to the goods does not pass to Garza until the buyer (Garza) receives them. EXERCISE 8-3 (1015 minutes) 1. Include. Merchandise passes to customer only when it is shipped. 2. Do not include. Title did not pass until January 3. 3. Include in inventory. Product belonged to Webber Inc. at December 31, 2010. 4. Do not include. Goods received on consignment remain the property of the consignor. 5. Include in inventory. Under invoice terms, title passed when goods were shipped. EXERCISE 8-4 (1015 minutes) 1. Raw Materials Inventory .................................. 8,100 Accounts Payable ................................... 8,100 2. No adjustment necessary. 3. Raw Materials Inventory .................................. 28,000 Accounts Payable ................................... 28,000 4. Accounts Payable ............................................ 7,500 Raw Materials Inventory ......................... 7,500 5. Raw Materials Inventory .................................. 19,800 Accounts Payable ................................... 19,800 EXERCISE 8-5 (1520 minutes) (a) Inventory December 31, 2010 (unadjusted) ................. $234,890 Transaction 2 ................................................................. 10,420 Transaction 3 ................................................................. 0 Transaction 4 ................................................................. 0 Transaction 5 ................................................................. Transaction 5 ....
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This note was uploaded on 07/28/2011 for the course ACCT 103 taught by Professor Huxhold during the Spring '11 term at San Diego.

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Ch 8 Solutions - SOLUTIONS TO EXERCISES EXERCISE 8-1 (1520...

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