Properly excluded item e 2500 goods were shipped fob

This preview shows page 55 - 57 out of 90 pages.

We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Financial Reporting, Financial Statement Analysis and Valuation
The document you are viewing contains questions related to this textbook.
Chapter 9 / Exercise 9.20
Financial Reporting, Financial Statement Analysis and Valuation
Wahlen
Expert Verified
longer has title to these goods. Properly excluded.)Item (e)+ 2,500(Goods were shipped FOB destination. Cain retains title until thecustomer receives them.)Item (f)– 3,000(These goods are owned by the consignor, not the consignee,and should not be included in Cain's inventory.)Corrected inventory$83,000Ex. 200Dalton Company was undergoing an end of year audit of its financial records. The auditors werein the process of reviewing Dalton’s inventory for year end, December 31, 2014. They completedan end of year inventory. The value of the ending inventory prior to any adjustments was$185,000, but before finishing up they had a few questions. Discussion with Dalton’s accountantrevealed the following: (a)Dalton sold goods costing $60,000 to Summey Company FOB shipping point on December28. The goods are not expected to reach Summey until January 12. The goods were notincluded in the physical inventory because they were not in the warehouse.(b)The physical count of the inventory did not include goods costing $95,000 that were shippedto Dalton FOB destination on December 27 and were still in transit at year-end.(c)Dalton received goods costing $25,000 on January 2. The goods were shipped FOBshipping point on December 26 by Strong Company. The goods were not included in thephysical count.(d)Dalton sold goods costing $40,000 to Hampton Company FOB destination on December 30.The goods were received by Hampton Company on January 8. Because the goods hadbeen shipped, they were excluded from the physical inventory count.(e)Dalton received goods costing $42,000 on January 2 that were shipped FOB destination onDecember 29. The shipment was a rush order that was suppose to arrive December 31.This purchase was included in the ending inventory of $192,000.(f)Dalton Company, as the consignee, had goods on consignment that cost $3,000. Becausethese goods were on hand as of December 31, they were included in the physical inventorycount.InstructionsAnalyze the above information and calculate a corrected amount for the ending inventory. Explainthe basis for your treatment of each item.Ans: N/A, LO: 1, Bloom: AN, Difficulty: Medium, Min: 20, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:Problem Solving, IMA: ReportingFOR INSTRUCTOR USE ONLY6-55
We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Financial Reporting, Financial Statement Analysis and Valuation
The document you are viewing contains questions related to this textbook.
Chapter 9 / Exercise 9.20
Financial Reporting, Financial Statement Analysis and Valuation
Wahlen
Expert Verified
Test Bank for Accounting: Tools for Business Decision Making, Fifth EditionSolution 200(20 min.)Start with$185,000Item (a)(Because the goods were shipped FOB shipping point titlepassed to Button upon shipping. Properly excluded.)Item (b)(Goods should be excluded. Title does not pass to Dalton untilgoods are received).Item (c)+25,000(Goods belong to Dalton. Title passed when supplier deliveredthe goods to the transportation company.)Item (d)+40,000(Because the goods were shipped FOB destination point Daltonhas title to these goods.)Item (e)–42,000(Goods were shipped FOB destination. Dalton does not taketitle until they receive them no matter when expected.)Item (f)– 3,000(These goods are owned by the consignor, not the consignee,and should not be included in Dalton's inventory.)Corrected inventory$205,000Ex. 201

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture