ch8 1

Bell Inc. took a physical inventory at the end of the year and determined that $830,000 of goods were on hand. In addition, Bell, Inc. determined that $60,000 of goods that were in transit that were shipped f.o.b. shipping point were actually received two days after the inventory count and that the company had $90,000 of goods out on consignment. What amount should Bell report as inventory at the end of the year?

Bell Inc. took a physical inventory at the end of the year and determined that $810,000 of goods were on hand. In addition, the following items were not included in the physical count. Bell, Inc. determined that $96,000 of goods purchased were in transit that were shipped f.o.b. destination (goods were actually received by the company three days after the inventory count).The company sold $40,000 worth of inventory f.o.b. destination. What amount should Bell report as inventory at the end of the year?

The accountant for the Pryor Sales Company is preparing the income statement for 2014 and the balance sheet at December 31, 2014. Pryor uses the periodic inventory system. The January 1, 2014 merchandise inventory balance will appear

Green Co. received merchandise on consignment. As of January 31, Green included the goods in inventory, but did not record the transaction. The effect of this on its financial statements for January 31 would be

Hudson, Inc. is a calendar-year corporation. Its financial statements for the years 2015 and 2014 contained errors as follows:

2015 2014
Ending inventory $ 6,000 overstated $ 16,000 overstated
Depreciation expense $ 4,000 understated $ 12,000 overstated

Assume that the proper correcting entries were made at December 31, 2014. By how much will 2015 income before taxes be overstated or understated?

Risers Inc. reported total assets of $3,200,000 and net income of $255,000 for the current year. Risers determined that inventory was understated by $69,000 at the beginning of the year and $30,000 at the end of the year. What is the corrected amount for total assets and net income for the year?

Kerr Co.'s accounts payable balance at December 31, 2014 was $1,400,000 before considering the following transactions:

• Goods were in transit from a vendor to Kerr on December 31, 2014. The invoice price was $70,000, and the goods were shipped f.o.b. shipping point on December 29, 2014. The goods were received on January 4, 2015.
• Goods shipped to Kerr, f.o.b. shipping point on December 20, 2014, from a vendor were lost in transit. The invoice price was $50,000. On January 5, 2015, Kerr filed a $50,000 claim against the common carrier.

In its December 31, 2014 balance sheet, Kerr should report accounts payable of

Feine Co. accepted delivery of merchandise which it purchased on account. As of December 31, Feine had recorded the transaction, but did not include the merchandise in its inventory. The effect of this on its financial statements for December 31 would be

Dolan Co. received merchandise on consignment. As of March 31, Dolan had recorded the transaction as a purchase and included the goods in inventory. The effect of this on its financial statements for March 31 would be

If the beginning inventory for 2014 is overstated, the effects of this error on cost of goods sold for 2014, net income for 2014, and assets at December 31, 2015, respectively, are

Hudson, Inc. is a calendar-year corporation. Its financial statements for the years 2015 and 2014 contained errors as follows:

2015 2014
Ending inventory $ 6,000 overstated $ 16,000 overstated
Depreciation expense $ 4,000 understated $ 12,000 overstated

Assume that no correcting entries were made at December 31, 2014. Ignoring income taxes, by how much will retained earnings at December 31, 2015 be overstated or understated?

If a company uses the periodic inventory system, what is the impact on net income of including goods in transit f.o.b. shipping point in purchases, but not ending inventory?

The following information was derived from the 2014 accounting records of Perez Co.:

Perez's Central Warehouse Perez's Goods
Held by Consignees
Beginning inventory $130,000 $ 14,000
Purchases 525,000 70,000
Freight-in 10,000
Transportation to consignees 5,000
Freight-out 30,000 8,000
Ending inventory 145,000 20,000

Perez's 2014 cost of sales was

Malone Corporation uses the perpetual inventory method. On March 1, it purchased $60,000 of inventory, terms 2/10, n/30. On March 3, Malone returned goods that cost $6,000. On March 9, Malone paid the supplier. On March 9, Malone should credit

If a company uses the periodic inventory system, what is the impact on the current ratio of including goods in transit f.o.b. shipping point in purchases, but not ending inventory?

Hudson, Inc. is a calendar-year corporation. Its financial statements for the years 2015 and 2014 contained errors as follows:

2015 2014
Ending inventory $ 6,000 overstated $ 16,000 overstated
Depreciation expense $ 4,000 understated $ 12,000 overstated

Assume that no correcting entries were made at December 31, 2014, or December 31, 2015 and that no additional errors occurred in 2016. Ignoring income taxes, by how much will working capital at December 31, 2016 be overstated or understated?

The failure to record a purchase of merchandise on account even though the goods are properly included in the physical inventory results in

Under a perpetual inventory system which accounts should be debited the each time a sale on account is made?

On June 15, 2014, Wynne Corporation accepted delivery of merchandise which it pur-chased on account. As of June 30, Wynne had not recorded the transaction or included the merchandise in its inventory. The effect of this on its balance sheet for June 30, 2014 would be

Risers Inc. reported total assets of $1,800,000 and net income of $240,000 for the current year. Risers determined that inventory was overstated by $18,000 at the beginning of the year (this was not corrected). What is the corrected amount for total assets and net income for the year?

What is the effect of a $50,000 overstatement of last year's inventory on current years ending retained earning balance?

The balance in Moon Co.'s accounts payable account at December 31, 2014 was $950,000 before any necessary year-end adjustments relating to the following:

• Goods were in transit to Moon from a vendor on December 31, 2014. The invoice cost was $40,000. The goods were shipped f.o.b. shipping point on December 29, 2014 and were received on January 4, 2015.
• Goods shipped f.o.b. destination on December 21, 2014 from a vendor to Moon were received on January 6, 2015. The invoice cost was $25,000.
• On December 27, 2014, Moon wrote and recorded checks to creditors totaling $30,000 that were mailed on January 10, 2015.

In Moon's December 31, 2014 balance sheet, the accounts payable should be

Dole Corp.'s accounts payable at December 31, 2014, totaled $750,000 before any necessary year-end adjustments relating to the following transactions:

• On December 27, 2014, Dole wrote and recorded checks to creditors totaling $350,000 causing an overdraft of $100,000 in Dole's bank account at December 31, 2014. The checks were mailed out on January 10, 2015.
• On December 28, 2014, Dole purchased and received goods for $150,000, terms 2/10, n/30. Dole records purchases and accounts payable at net amounts. The invoice was recorded and paid January 3, 2015.
• Goods shipped f.o.b. destination on December 20, 2014 from a vendor to Dole were received January 2, 2015. The invoice cost was $65,000.

At December 31, 2014, what amount should Dole report as total accounts payable?