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5 tvs on hand that cost 6100 were never recorded on

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5.TVs on hand that cost $6,100 were never recorded on the books.InstructionsCompute the correct inventory at December 31, 2020.Ans: NA, LO: 1, Bloom: AN, Difficulty: Difficult, Min: 10, AACSB: Analytic, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA:FSA, IFRS: NoneSolution 8-157Inventory per books$38,500Add:Shipment received 12/30/20$15,000TVs on hand6,10021,10059,600Deduct:TVs recorded twice4,600TVs shipped 12/28/2010,00014,600Correct inventory 12/31/20$45,0003 - 265
Test Bank for Intermediate Accounting, Seventeenth EditionPr. 8-158—Analysis of errors.(All sales and purchases are on credit.)Indicate in each of the spaces provided the effect of the described errors on the various elementsof a company's financial statements. Use the following codes: O = amount is overstated;U =amount is understated; NE = no effect. Assume a periodic inventory system.AccountsAccountsCost ofReceivableInventoryPayableSalesGoods SoldEXAMPLE: Excluded goods in rentedwarehouse from inventoryNEUNENEOcount._____________________________________________________________________________1.Goods in transit shipped "f.o.b.destination" by supplier wererecorded as a purchase but wereexcluded from ending inventory._____________________________________________________________________________2.Goods held on consignment wereincluded in inventory count andrecorded as a purchase._____________________________________________________________________________3.Goods in transit shipped "f.o.b.shipping point" were not recordedas a sale and were included inending inventory._____________________________________________________________________________4.Goods were shipped and appro-priately excluded from endinginventory but sale was notrecorded._____________________________________________________________________________Ans: NA, LO: 5, Bloom: AN, Difficulty: Difficult, Min: 8–10, AACSB: Reflective, AICPA BB: None, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA:Reporting, IFRS: NoneSolution 8-1581.NENEONEO2.NEOONENE3.UONEUU4.UNENEUNEPr. 8-159—Accounting for purchase discounts.3 - 266
The Accounting Information SystemOtto Corp. purchased merchandise during 2020 on credit for $700,000; terms 2/10, n/30. All ofthe gross liability except $100,000 was paid within the discount period. The remainder was paidwithin the 30-day term. At the end of the annual accounting period, December 31, 2020, 90% ofthe merchandise had been sold and 10% remained in inventory. The company uses a periodicsystem.Instructions(a)Assuming that the net method is used for recording purchases, prepare the entries for thepurchase and two subsequent payments.(b)What dollar amounts should be reported for the final inventory and cost of goods sold underthe (1) net method; (2) gross method?Assume that there was no beginning inventory.Ans: NA, LO: 2, Bloom: AP, Difficulty: Difficult, Min: 20, AACSB: Analytic, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA:Reporting, IFRS: NoneSolution 8-159(a) Purchases.............................................................................................686,000Accounts Payable......................................................................686,000(To record the purchase at net amount:.98 × $700,000 = $686,000.)Accounts Payable.................................................................................588,000Cash..........................................................................................588,000(To record payment within the discount period:$700,000 – $100,000 = $600,000; .98 × $600,000 = $588,000.)Accounts Payable.................................................................................98,000Purchase Discounts Lost.......................................................................2,000Cash..........................................................................................100,000(To record the final payment.)(b)(1)Net method:Purchases:$686,000Final inventory: 10% × $686,000 =68,600Cost of goods sold: 90% × $686,000 =$617,400(The $2,000 discount lost is reported in the other expense section of the income statement.)(2)Gross method:Purchases:$700,000Purchases:$700,000Less purchase discounts:Less purchase discounts:.02 × $600,000 =12,000.02 × $600,000 =12,000Goods available688,000

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Term
Spring
Professor
MOFFITT
Tags
Double entry bookkeeping system

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