Week 2 - Individual Assignments - David Trejo

There is an assumption that actual cost is the

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amongst current costs, costs assigned to income, or to inventory valuation. There is an assumption that actual cost is the appropriate method for inventory valuation. This assumption renders method, due to the fact that the LIFO method does not value goods with their normal flow. Some argue that LIFO is a periods of high price fluctuations, LIFO tends to stabilize reported income due to the fact that "paper" income is elim when employing LIFO so that reported profit is not artificially increased by management by means of contracting.
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E8-5 (Inventoriable Costs—Error Adjustments) Craig Company asks you to review its December 31, 2007, inventory values and prepare the necessary adjustments to the books. The following information  given to you. 1. Craig uses the periodic method of recording inventory. A physical count reveals $234,890 of inventory on hand at December 31, 2007. 2. Not included in the physical count of inventory is $13,420 of merchandise purchased on December 15 from Browser. This merchandise was shipped f.o.b. shipping point on December 29 and arrived in January. The invoice arrived and was recorded on December 31. 3. Included in inventory is merchandise sold to Champy on December 30, f.o.b. destination. This merch was shipped after it was counted. The invoice was prepared and recorded as a sale on account for $12,800 on December 31. The merchandise cost $7,350, and Champy received it on January 3. 4. Included in inventory was merchandise received from Dudley on December 31 with an invoice price of $15,630. The merchandise was shipped f.o.b. destination. The invoice, which has not yet arrived, has not been recorded. 5. Not included in inventory is $8,540 of merchandise purchased from Glowser Industries. This merchan was received on December 31 after the inventory had been counted. The invoice was received and recorded on December 30. 6. Included in inventory was $10,438 of inventory held by Craig on consignment from Jackel Industries. 7. Included in inventory is merchandise sold to Kemp f.o.b. shipping point. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale for $18,900 on Decemb 31. The cost of this merchandise was $10,520, and Kemp received the merchandise on January 5.
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  • Spring '10
  • Rob
  • Balance Sheet, Generally Accepted Accounting Principles, FIFO and LIFO accounting, checking account balance

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