Rachet Corporation is a wholesale distributor of truck replacement parts. Initial amounts taken from Rachet's records are as follows: Inventory at December 31 (based on a physical count of goods in Rachet's warehouse on December 31) Accounts payable at December 31: Vendor Boxes Company Crates Company Driver Company Express Company Freight Company Gears Company Accounts payable, December 31 Sales for the year Terms 2%, 10 days, net 30 Net 30 Net 30 Net 30 Net 30 Net 30 $ 1,390,000 Amount $ 293,000 238,000 328,000 253,000 $ 1,112,000 $ 9,700,000 Additional Information: 1. Parts held by Rachet on consignment from Crates, amounting to $225,000, were included in the physical count of goods in Rachet's warehouse and in accounts payable at December 31. 2. Parts totaling $36,000, which were purchased from Freight and paid for in December, were sold in the last week of the year and appropriately recorded as sales of $42,000. The parts were included in the physical count of goods in Rachet's warehouse on December 31 because the parts were on the loading dock waiting to be picked up by customers. 3. Parts in transit on December 31 to customers, shipped f.o.b. shipping point on December 28, amounted to $62,000. The customers received the parts on January 6 of the following year. Sales of $68,000 to the customers for the parts were recorded by Rachet on January 2. 4. Retailers were holding goods on consignment from Rachet, which had a cost of $350,000 and a retail value of $390,000. 5. Goods were in transit from Gears to Rachet on December 31. The cost of the goods was $39,000, and they were shipped f.o.b. shipping point on December 29. 6. A freight bill in the amount of $3,400 specifically relating to inventory purchased in December, all of which was still in the inventory at December 31, was received on January 3. The freight bill was not included in either the inventory or in accounts payable at December 31. 7. All the purchases from Boxes occurred during the last seven days of the year. These items have been recorded in accounts payable and accounted for in the physical inventory at cost before discount. Rachet's policy is to pay invoices in time to take advantage of all discounts, adjust inventory accordingly, and record accounts payable net of discounts.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Rachet Corporation is a wholesale distributor of truck replacement parts. Initial amounts taken from Rachet's records are as follows:
Inventory at December 31 (based on a physical count
of goods in Rachet's warehouse on December 31)
Accounts payable at December 31:
Vendor
Boxes Company
Crates Company
Driver Company
Express Company
Freight Company
Gears Company
Accounts payable, December 31
Sales for the year
Additional Information:
Terms
2%, 10 days, net 30
Net 30
Net 30
Net 30
Net 30
Net 30
$ 1,390,000
Amount
$ 293,000
238,000
328,000
253,000
$ 1,112,000
$ 9,700,000
1. Parts held by Rachet on consignment from Crates, amounting to $225,000, were included in the physical count of goods in
Rachet's warehouse and in accounts payable at December 31.
2. Parts totaling $36,000, which were purchased from Freight and paid for in December, were sold in the last week of the year and
appropriately recorded as sales of $42,000. The parts were included in the physical count of goods in Rachet's warehouse on
December 31 because the parts were on the loading dock waiting to be picked up by customers.
3. Parts in transit on December 31 to customers, shipped f.o.b. shipping point on December 28, amounted $62,000. The
customers received the parts on January 6 of the following year. Sales of $68,000 to the customers for the parts were recorded
by Rachet on January 2.
4. Retailers were holding goods on consignment from Rachet, which had a cost of $350,000 and a retail value of $390,000.
5. Goods were in transit from Gears to Rachet on December 31. The cost of the goods was $39,000, and they were shipped f.o.b.
shipping point on December 29.
6. A freight bill in the amount of $3,400 specifically relating to inventory purchased in December, all of which was still in the
inventory at December 31, was received on January 3. The freight bill was not included in either the inventory or in accounts
payable at December 31.
7. All the purchases from Boxes occurred during the last seven days of the year. These items have been recorded in accounts
payable and accounted for in the physical inventory at cost before discount. Rachet's policy is to pay invoices in time to take
advantage of all discounts, adjust inventory accordingly, and record accounts payable net of discounts.
Transcribed Image Text:Rachet Corporation is a wholesale distributor of truck replacement parts. Initial amounts taken from Rachet's records are as follows: Inventory at December 31 (based on a physical count of goods in Rachet's warehouse on December 31) Accounts payable at December 31: Vendor Boxes Company Crates Company Driver Company Express Company Freight Company Gears Company Accounts payable, December 31 Sales for the year Additional Information: Terms 2%, 10 days, net 30 Net 30 Net 30 Net 30 Net 30 Net 30 $ 1,390,000 Amount $ 293,000 238,000 328,000 253,000 $ 1,112,000 $ 9,700,000 1. Parts held by Rachet on consignment from Crates, amounting to $225,000, were included in the physical count of goods in Rachet's warehouse and in accounts payable at December 31. 2. Parts totaling $36,000, which were purchased from Freight and paid for in December, were sold in the last week of the year and appropriately recorded as sales of $42,000. The parts were included in the physical count of goods in Rachet's warehouse on December 31 because the parts were on the loading dock waiting to be picked up by customers. 3. Parts in transit on December 31 to customers, shipped f.o.b. shipping point on December 28, amounted $62,000. The customers received the parts on January 6 of the following year. Sales of $68,000 to the customers for the parts were recorded by Rachet on January 2. 4. Retailers were holding goods on consignment from Rachet, which had a cost of $350,000 and a retail value of $390,000. 5. Goods were in transit from Gears to Rachet on December 31. The cost of the goods was $39,000, and they were shipped f.o.b. shipping point on December 29. 6. A freight bill in the amount of $3,400 specifically relating to inventory purchased in December, all of which was still in the inventory at December 31, was received on January 3. The freight bill was not included in either the inventory or in accounts payable at December 31. 7. All the purchases from Boxes occurred during the last seven days of the year. These items have been recorded in accounts payable and accounted for in the physical inventory at cost before discount. Rachet's policy is to pay invoices in time to take advantage of all discounts, adjust inventory accordingly, and record accounts payable net of discounts.
Required:
Complete the following schedule of adjustments to the initial amounts.
Note: Amounts to be deducted should be indicated with a minus sign.
Initial amounts
Adjustments increase (decrease):
1.
2.
3.
4.
5.
6.
7.
Total adjustments
Adjusted amounts
$
Inventory
1,390,000
$
Accounts
Payable
Sales
1,112,000 $9,700,000
Transcribed Image Text:Required: Complete the following schedule of adjustments to the initial amounts. Note: Amounts to be deducted should be indicated with a minus sign. Initial amounts Adjustments increase (decrease): 1. 2. 3. 4. 5. 6. 7. Total adjustments Adjusted amounts $ Inventory 1,390,000 $ Accounts Payable Sales 1,112,000 $9,700,000
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