Prepare any correcting entries to adjust inventory to its pr

Prepare any correcting entries to adjust inventory to its proper amount at December 31, 2014. Assume the books have not been closed.

Craig Company asks you to review its December 31, 2014, inventory values and prepare the necessary adjustments to the books. The following information is given to you.

1.		Craig uses the periodic method of recording inventory. A physical count reveals $299,250 of inventory on hand at December 31, 2014.
2.		Not included in the physical count of inventory is $17,097 of merchandise purchased on December 15 from Browser. This merchandise was shipped f.o.b. shipping point on December 29 and arrived in January. The invoice arrived and was recorded on December 31.
3.		Included in inventory is merchandise sold to Champy on December 30, f.o.b. destination. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale on account for $16,307 on December 31. The merchandise cost $9,364, and Champy received it on January 3.
4.		Included in inventory was merchandise received from Dudley on December 31 with an invoice price of $19,913. The merchandise was shipped f.o.b. destination. The invoice, which has not yet arrived, has not been recorded.
5.		Not included in inventory is $10,880 of merchandise purchased from Glowser Industries. This merchandise was received on December 31 after the inventory had been counted. The invoice was received and recorded on December 30.
6.		Included in inventory was $13,298 of inventory held by Craig on consignment from Jackel Industries.
7.		Included in inventory is merchandise sold to Kemp f.o.b. shipping point. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale for $24,079 on December 31. The cost of this merchandise was $13,402, and Kemp received the merchandise on January 5.
8.		Excluded from inventory was a carton labeled “Please accept for credit.” This carton contains merchandise costing $1,911 which had been sold to a customer for $3,312. No entry had been made to the books to reflect the return, but none of the returned merchandise seemed damaged

1) No entry is needed. Beggining physical inventory count balance = $299,250

2) No entry needed but an adjustment to physical inventory count = +$17,097

3) Adjustment entry need to match period

Sales Dr. $16,307

Accounts Receivable Cr. $16,307

(To record the reversal of sale recorded in December as it is received by the customer on Jan. 3)

Sales wiil be recorded in the month of january because inventory is sold on f.o.b. destination basis and it is received by customer on January 3.

No adjustment needed in inventory physical count.

4) Adjustment entry need to match period

Purchases (inventory) Dr. $19,913

Accounts Payable Cr. $19,913

(To record the inventory purchased as it is unrecorded on December 31)

No adjustment needed in inventory physical count.

5) No entry needed but an adjustment to physical inventory count = + $10,880

6) No entry needed. Adjustment to physical inventory count required as consignment is not held on inventory = - $13,298

7) No entry needed because inventory is sold on the f.o.b. shipping point basis.

Adjustment to physical inventory count required = - $13,402 (cost of inventory)

8) Adjustment entry

Sales returns and allowances Dr. $3,312

Accounts Receivables Cr. $3,312

(To record merchandise returned not recorded earlier)

Adjustment to physical inventory count required = - $1,911 (cost of inventory)

Proper inventory balance on December 31, 2014 = $299,250+$17,097+$10,880-$13,298-$13,402-$1,911

= $298,616

Prepare any correcting entries to adjust inventory to its proper amount at December 31, 2014. Assume the books have not been closed. Craig Company asks you to r

Prepare any correcting entries to adjust inventory to its pr

Solution

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