7. The inventory was destroyed by fire on December 31. The following data were obtained from the accounting records: Gross profit methodThe inventory was destroyed by fire on December 31. The following data were obtained from the accounting records:Jan. 1Jan. 1 Dec. 31InventoryPurchases (net)SalesEstimated gross profit ratea. Estimate the cost of the inventory destroyed.Estimated Cost of Merchandise DestroyedLine Item Description Amount Amount$$350,0002,950,0004,440,00035%b. Which method is used to estimate inventory cost in case of inventory destroyed by fire?

Inventory valuation refers to the process of assigning a monetary value to the inventory of a…

Answered: Gross profit method The inventory was…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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P2-4A. Journal Entries Taylor Manufacturing Company uses the perpetual inventory system to record trans- actions related to its manufacturing inventories. The following transactions occurred during March: Mar. 6 Recorded the payroll: $5,000 of direct labor and $1,000 of indirect labor. 8 Received $7,000 of materials and components that had been ordered on account. 10 Completed product costing $11,000 and transferred it to the warehouse. Requisitioned $2,500 of materials for use in the factory; $2,000 was used as direct materials and the remainder was used as indirect materials. 12 Sold on account product costing $1,500 for $2,250. 15 Applied $3,000 of manufacturing overhead cost to the product currently being worked on. 21 Paid $250 cash for a special material component that was shipped via overnight delivery. 27 Sold product costing $1,450 for $2,500 cash. Required Prepare general journal entries to record these transactions.
The list of items that may or may not be reported as inventory in a company's December 31 financial position is presented below. Indicate which of these items would typically be reported as inventory in the financial statements. If an item is not reported as inventory, indicate how it should be reported in the financial statements. 1.Costs identified with units completed by a manufacturing firm but not yet sold. 2.Goods sold f.o.b. destination that is in transit at December 31.3.Short-term investment is stocks and bonds that will. Be resold in the near future.
15.Your review of ABC Company's inventory and related records for the year revealed the following information:Inventory, 1/1 - 450,000Purchases -3,150,000Sales -4,200,000You conducted a physical inventory on December 31 and determined P450,000 was in the company's warehouse. The management suspects some new employees may have pilfered a portion of the merchandise inventory.What is the cost of the missing inventory assuming that ABC's gross profit remains at 30% of sales?
On December 1, 20x1, the warehouse of A Company and all inventories contained therein were damaged by flood. Off-site back up of data base shows the following data:Beginning inventory - 18,850.00Payable, beginning - 7,500.00Payable, November 30 - 1,980.00Payments to supplier - 51,450.00Transportation in - 4,760.00Purchase returns - 1,570.00Sales up to November 30 - 75,200.00Sales returns - 5,300.00Sales discounts - 3,300.00GPR based on sales - 25%Additional information: Goods in transit as of November 30, 20x1 amounted to P5,000 and materials damaged by flood can be sold at a salvage value of P2,580. Inventory loss is
Wildhorse Company took a physical inventory on December 31 and determined that goods costing $676,000 were on hand. Not included in the physical count were $9,000 of goods purchased from Sandhill Corporation, f.o.b. shipping point, and $29,000 of goods sold to Ro-Ro Company for $37,000, f.o.b. destination. Both the Sandhill purchase and the Ro-Ro sale were in transit at year-end. What amount should Wildhorse report as its December 31 inventory? December 31 Inventory $ %24
Brockton Ltd. began applying IFRS in 20X8. One of the necessary adjustments was to adjust past inventory records to remove warehousing expenses from the balances of the ending inventories for 20X5, 20X6, and 2OX7, and restate earnings. The pre- adjustment inventory balances and the warehousing costs contained therein were as follows: Balance, 31 December $800, 000 Year Warehousing Costs $30, 000 18, 000 25, 000 20X7 20X6 680, 000 720, 000 20X5 Required: 1. Show the impact this change will have on the company's earnings. Assume an income tax rate of 30%. Earnings Increase (Decrease) 20X5 20X6 20X7 Warehousing costs: Reported in opening inventory Reported in ending inventory Net change in pre-tax earnings Income tax Adjustment to net earnings 2. Prepare the adjusting entry (entries) that Brockton will need to make on its books in 20X8 to reflect the above information. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View…
Assume that on September 30, immediately after this balance sheet was prepared, a tornado completely destroyed one of the barns. This barn had a cost of $14,000 and was not insured against this type of disaster. Explain what changes would be required in your September 30 balance sheet to reflect the loss of this barn.
Larkspur is trying to determine value of its ending inventory as of Feb 28, 2017, company's year end. Accountant counted everything on the warehouse on Feb 28, ending inventory valuation of 46400. However, they didn't know how to treat the following transactions so they aren't recorded. First column asks, should it be included? Yes or no. Second column the amount
19.Your review of ABC Company's inventory and related records for the year revealed the following information:Inventory, 1/1 - 450,000Purchases -3,150,000Sales -4,200,000You conducted a physical inventory on December 31 and determined P450,000 was in the company's warehouse. The management suspects some new employees may have pilfered a portion of the merchandise inventory.What is the cost of the missing inventory assuming that ABC's gross profit remains at 30% of sales?
(i)The inventory costing $ 150,000 being ordered by customers before the year end was excluded from the ending inventory balance as they are set aside for delivery after year end. The ending balance of inventory as on the statement of financial position was $ 600,000. (ii) Inventory list shows 40 boxes of rice but only 38 boxes were found in the warehouse. (iii) The inventory has a cost of $600,000 and realizable value of $540,000 as the items are outdated. The ending balance of inventory as on the statement of financial position was $ 600,000. Q) For each misstatement above, explain which of the above assertions is violated. (Each assertion can only be used once.) Also, give the relevant audit objective the auditor should focus on when detecting the misstatement if the assertion is "Valuation and Allocation "
During the taking of its physical inventory on December 31, 20Y4, Barry's Bike Shop incorrectly counted its inventory as $225,870 instead of the correct amount of $179,251. The effect on the balance sheet and income statement would be a. assets overstated by $46,619; retained earnings understated by $46,619; and net income statement understated by $46,619 b. assets overstated by $46,619; retained earnings understated by $46,619; and no effect on the income statement c. assets, retained earnings, and net income all overstated by $46,619 d. assets and retained earnings overstated by $46,619; and net income understated by $46,619
Audit Procedures 1. Select a sample of inventory items in the factory warehouse and trace each item to the inventory count sheets to determine whether it has been included and whether the quantity and description are correct. 2. Trace selected quantities from the inventory list to the physical inventory to make sure that it exists and the quantities are the same. 3. Compare the quantities on hand and unit prices on this year's inventory count sheets with those in the preceding year as a test for large differences. 4. Read the footnote disclosures related to the company's accounting policies for valu- ing inventory to make sure the information provided correctly reflects the method used to value inventory. 5. Test the extension of unit prices times quantity on the inventory list for a sample of inventory items, test foot the list, and compare the total to the general ledger. that 6. Send letters directly to third parties who hold the client's inventory, and request they respond directly…

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