The balance in Iwig Co.'s accounts payable account at December 31, 2004 was $400,000 before any necessary year-end adjustments relating to the following:
Goods were in transit to Iwig from a vendor on December 31, 2004. The invoice cost was $50,000. The goods were shipped f.o.b. shipping point on December 29, 2004 and were received on January 4, 2005.
Goods shipped f.o.b. destination on December 21, 2004 from a vendor to Iwig were received on January 6, 2005. The invoice cost was $25,000.
On December 27, 2004, Iwig wrote and recorded checks to creditors totaling $30,000 that were mailed on January 10, 2005.
In Iwig's December 31, 2004 balance sheet, the accounts payable should be
Amount before adjustment is 400,000
Goods in transit were shipped fob shipping point and so became the property of ...
The solution explains how to calculate the year end accounts payable.