Inventory Calculations
Not what you're looking for?
The following items relating to the Mets Co's periodic inventory system, if incorrect, have not been corrected as of 12/31/05:
a Goods purchased FOB DESTINATION, with cost of $250,000, are in transit at 12/31/05. A purchase was recorded. These goods were not included in the 12/31/05 inventory count.
b Goods sold FOB SHIPPING POINT for $430,000, are in transit at 12/31/05. A sale was not recorded. The goods, which have a cost of $290,000, were included in the 12/31/05 inventory count.
c Inventory count at 12/31/03 was understated by $70,000
Inventory count at 12/31/04 was overstated by $50,000.
d Mets Co's goods out on consignment at 12/31/05, with a cost of $90,000, were not included in the 12/31/05 inventory count. The goods have a selling price of $170,000, but no sale was recorded.
e New York Co's goods, with a selling price of $110,000, are held by Mets Co on consignment at 12/31/05. A purchase was recorded. The goods were not included in the 12/31/05 inventory count.
** 1) Determine the amount that each of the following is wrong and indicate if overstated, understated, or ok: 1) Sales FYE 12/31/05; 2) Inventory, 1/1/05; 3) Purchases FYE 12/31/05; 4) Inventory, 12/31/05; 5) COGS FYE 12/31/05; 6) Gross Profit FYE 12/31/05.
CLUE must match:Ignoring direction, Sales are misstated by $230,000 MORE than Ending Inventory
Purchase this Solution
Solution Summary
The solution explains the calculation of Sales, Inventory, Purchases , and Gross Profit after adjusting the inventory account.
Solution Preview
1. Sales FYE 12/31/05 - The sales are understated by $430,000. Under FOB shipping point, the title passes to the buyer once the goods leave the seller. The goods are in transit so the sales should have been recorded.
2. Inventory 1/1/05 - Overstated $50,000. The closing inventory of 12/31/04 becomes the opening of 1/1/05 for the overstatement continues. The inventory of 12/31/03 would be compensated in 2004 and ...
Purchase this Solution
Free BrainMass Quizzes
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
Situational Leadership
This quiz will help you better understand Situational Leadership and its theories.
Paradigms and Frameworks of Management Research
This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.