Nash Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. The corporation's books disclosed the following. Beginning inventory Purchases for the year Purchase returns Amount of the loss $164,700 $ 415,300 27,700 Sales revenue Sales returns Rate of gross profit on net sales $677,100 23,500 Merchandise with a selling price of $19.100 remained undamaged after the fire. Damaged merchandise with an original selling price of $13,800 had a net realizable value of $5,300. Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage. 30 %

Nash Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. The corporation's books disclosed the following. Beginning inventory Purchases for the year Purchase returns Amount of the loss $164,700 $ 415,300 27,700 Sales revenue Sales returns Rate of gross profit on net sales $677,100 23,500 Merchandise with a selling price of $19.100 remained undamaged after the fire. Damaged merchandise with an original selling price of $13,800 had a net realizable value of $5,300. Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage. 30 %

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter6: Cost Of Goods Sold And Inventory

Section: Chapter Questions

Problem 71APSA: Effects of an Inventory Error The income statements for Graul Corporation for the 3 years ending in...

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If Wakowski Companys ending inventory was actually $86,000 but was adjusted at year end to a balance of $68,000 in error, what would be the impact on the presentation of the balance sheet and income statement for the year that the error occurred, if any?
Shaquille Corporation began the current year with inventory of 50,000. During the year, its purchases totaled 110,000. Shaquille paid freight charges of 8,500 for those purchases. At the end of the year, Shaquille had inventory of 47,800. Prepare a schedule to determine Shaquille's cost of goods sold for the current year.
Reid Company uses the periodic inventory system. On January 1, it had an inventory balance of 250,000. During the year, it made 613,000 of net purchases. At the end of the year, a physical inventory showed it had ending inventory of 140,000. Calculate Reid Companys cost of goods sold for the year.
If Barcelona Companys ending inventory was actually $122,000, but the cost of consigned goods, with a cost value of $20,000 were accidentally included with the company assets, when making the year-end inventory adjustment, what would be the impact on the presentation of the balance sheet and income statement for the year that the error occurred, if any?
On January 1, Pope Enterprises inventory was 625,000. Pope made 950,000 of net purchases during the year. On its year-end income statement, Pope reported cost of goods sold of 1,025,000. Calculate Popes December 31 ending inventory.
Effects of an Inventory Error The income statements for Graul Corporation for the 3 years ending in 2019 appear below. During 2019, Graul discovered that the 2017 ending inventory had been misstated due to the following two transactions being recorded incorrectly. a. A purchase return of inventory costing $42,000 was recorded twice. b. A credit purchase of inventory' made on December 20 for $28,500 was not recorded. The goods were shipped F.O.B. shipping point and were shipped on December 22, 2017. Required: 1. Was ending inventory for 2017 overstated or understated? By how much? 2. Prepare correct income statements for all 3 years. 3. CONCEPTUAL CONNECTION Did the error in 2017 affect cumulative net income for the 3-year period? Explain your response. 4. CONCEPTUAL CONNECTION Why was the 2019 net income unaffected?
Refer to the information in E22-13. Required: Prepare the correcting journal entries if the company discovers each error 2 years after it is made and it has closed the books for the second year. Ignore income taxes. E22-13: The following are independent errors made by a company that uses the periodic inventory system: a. Goods in transit, purchased on credit and shipped FOB destination, 10,000, were included in purchases but not in the physical count of ending inventory. b. Purchase of a machine for 2,000 was expensed. The machine has a 4-vear life, no residual value, and straight-line depreciation is used. c. Wages payable of 2,000 were not accrued. d. Payment of next years rent, 4,000, was recorded as rent expense. e. Allowance for doubtful accounts of 5,000 was not recorded. The company normally uses the aging method. f. Equipment with a book value of 70,000 and a fair value of 100,000 was sold at the beginning of the year. A 2-year, non-interest-bearing note for 129,960 was received and recorded at its face value, and a gain of 59,960 was recognized. No interest revenue was recorded and 14% is a fair rate of interest.
Indigo Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. The corporation's books disclosed the following. Beginning inventory Purchases for the year Purchase returns Amount of the loss $ tA $172,400 406,400 27,100 Sales revenue Sales returns Rate of gross profit on net sales Merchandise with a selling price of $21,300 remained undamaged after the fire. Damaged merchandise with an original selling price of $14,600 had a net realizable value of $5,200. Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage. $621,100 174430 22,800 30 %
Grouper Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. The corporation's books disclosed the following. Beginning inventory Purchases for the year Purchase returns Amount of the loss $173,200 $ 424,200 28,000 Sales revenue Sales returns Rate of gross profit on net sales $672,900 24,600 Merchandise with a selling price of $21,000 remained undamaged after the fire. Damaged merchandise with an original selling price of $16,100 had a net realizable value of $5,700. Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage. 30 %
Blossom Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. The corporation's books disclosed the following. Beginning inventory Purchases for the year Purchase returns $168,500 Amount of the loss 412,700 30,100 Sales revenue Sales returns Rate of gross profit on net sales $628,200 25,600 20 % Merchandise with a selling price of $20,300 remained undamaged after the fire. Damaged merchandise with an original selling price of $15,200 had a net realizable value of $5,200. Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage.
Metlock Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. The corporation's books disclosed the following. Beginning inventory $155,300 Sales revenue $655,700 Purchases for the year 368,400 Sales returns 23.800 Purchase returns 31,200 Rate of gross profit on net sales 30 % Merchandise with a selling price of $21,800 remained undamaged after the fire. Damaged merchandise with an original selling price of $13,500 had a net realizable value of $5.100. Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage. Amount of the loss %24
Shamrock Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. The corporation's books disclosed the following. Beginning inventory $180,800 Sales revenue $662,500 Purchases for the year 361,100 Sales returns 24,600 Purchase returns 27,100 Rate of gross profit on net sales 30 % Merchandise with a selling price of $20,000 remained undamaged after the fire. Damaged merchandise with an original selling price of $15,500 had a net realizable value of $5,600. Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage. Amount of the loss $ 479,300