Problem 13-6 (AICPA Adapted)On December 31, 2020, a big fire caused severe damage to theWhat amount should be reported as inventory fire loss?At the beginning of 2020, the entity changed the policy on thesalvaged. Damaged merchandise marked to sell at P100,000profit rate of 5% higher than the gross profit rate in 2019.had an estimated realizable value of P10,000.warehouse of Claire Company.Undamaged merchandise marked to sell at P500,000 wasselling prices of the merchandise in order to produce a gross20202019Beginning inventoryPurchasesPurchase returnSales1,000,0008,000,000500,0009,000,0005,600,000100,0006,000,000onse St rate of 5% higher than the gross profit rate in 2019.Uadamaged merchandise marked to sell at P500,000 wassalve estimated realizable value of P10,000.a. 2,200,000b. 1,840,000c. 1,600,000d. 1,780,000

Merchandisers (wholesalers, retailers and distributors) buy inventory with the intention of selling…

Problem 13-6 (AICPA Adapted) On December 31, 2020, a big fire caused severe damage to the warehouse of Claire Company. 2020 Beginning inventory Purchases Purchase return Sales 2019 1,000,000 8,000,000 500,000 9,000,000 5,600,000 100,000 6,000,000 At the beginning of 2020, the entity changed the policy on the selling prices of the merchandise in order to produce a gross profit rate of 5% higher than the gross profit rate in 2019. Undamaged merchandise marked to sell at P500,000 was salvaged. Damaged merchandise marked to sell at P100,000 had an estimated realizable value of P10,000. What amount should be reported as inventory fire loss? a. 2,200,000 b. 1,840,000 c. 1,600,000 d. 1,780,000

Problem 13-6 (AICPA Adapted) On December 31, 2020, a big fire caused severe damage to the warehouse of Claire Company. 2020 Beginning inventory Purchases Purchase return Sales 2019 1,000,000 8,000,000 500,000 9,000,000 5,600,000 100,000 6,000,000 At the beginning of 2020, the entity changed the policy on the selling prices of the merchandise in order to produce a gross profit rate of 5% higher than the gross profit rate in 2019. Undamaged merchandise marked to sell at P500,000 was salvaged. Damaged merchandise marked to sell at P100,000 had an estimated realizable value of P10,000. What amount should be reported as inventory fire loss? a. 2,200,000 b. 1,840,000 c. 1,600,000 d. 1,780,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 14E: Refer to the information in E22-13. Required: Prepare the correcting journal entries if the company...

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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.
Effects of an Error in Ending Inventory Waymire Company prepared the partial income statements presented below for 2019 and 2018. During 2020, Waymires accountant discovered that ending inventory for 2018 had been understated by $6,500. Required: 1. Prepare corrected income statements for 2019 and 2018. 2. Prepare a schedule showing each financial statement item affected by the error and the amount of the error for that item (ignore the effect of income taxes). Indicate whether each error is an overstatement (+) or an understatement (-).
Inventory Errors McLelland Inc. reported net income of $175,000 for 2019 and $210,000 for 2020. Early in 2020, McLelland discovers that the December 31, 2019 ending inventory was overstated by $20,000. For simplicity, ignore taxes. Required: 1. What is the correct net income for 2019? For 2020? 2. Assuming the error was not corrected, what is the effect on the balance sheet at December 31, 2019? At December 31, 2020?
Problem 13-10 (AICPA Adapted) On September 30, 2021, a fire destroyed most of the merchandise inventory of Paragon Company. All goods were completely destroyed except for partially damaged goods that normally sell for P100,000 and that had an estimated net realizable value of P25,000 and undamaged goods that normally sell for P60,000. Inventory-January 1, 2021 Net purchases, January 1 through September 30, 2021 Net sales, January 1 through September 30, 2021 660,000 4,240,000 5,600,000 2020 2019 2018 5,000,000 3,840,000 3,000,000 2,200,000 1,000,000 710,000 Net sales Cost of goods sold What amount of fire loss shoul be recognized on September 30, 2021? a. 700,000 b. 615,000 c. 630,000 d. 580,000
On September 30, 2020, a fire destroyed̟most of the All goods were completely destroyed except for partially damaged goods that normally sell for P100,000 and that had an estimated net realizable value of P25,000 and undamaged What is the amount of fire loss to be recognized on September Problem 13-8 (AICPA Adapted) merchandise inventory of Paragon Company. an estimated net realizable value of P26,000 and undamacd goods that normally sell for P60,000. Inventory -January 1, 2020 Net purchases, January 1 through September 30, 2020 Net sales, January 1 through September 30, 2020 660,000 4,240,000 5,600,000 2019 2018 2017 Net sales Cost of goods sold 5,000,000 3,840,000 3,000,000 2,200,000 1,000,000 710,000 What is the amount of fire loss to be recognized on 20, 2020? a. 700,000 b. 615,000 с. 630,000 d. 580,000
1. On October 21, 2020, a fire destroyed the entire uninsured merchandise inventory of the Renan Merchandising Company. The following data are available: Inventory, January 1 P80,000; Markup percentage on cost 25%; Purchases, January 1 through October 21 P560,000; Sales, January 1 through October 21 P776,000.What is the approximate inventory loss as a result of the fire? choices: P19,200 P34,000 P58,000 P27,200 2. Daniel Company prepares monthly income statements. A physical inventory is taken only at year-end; hence, month-end inventories must be estimated. All sales are made on account. The rate of markup on cost is 50 percent. The following information relates to the month of August: Accounts receivable, August 1 P20,000; Accounts receivable, August 31 P30,000Collection of accounts receivable during August P50,000; Inventory, August 1 P36,000; Purchases of inventory during August P32,000. The estimated cost of the May 31 inventory is…
H. On Feb. 18, 2020, a fire destroyed the merchandise inventory of Cristina Santiago Shirts. The following information was available from the entity's accounting office: Cost of Goods Sold Transportation In Merchandise Inventory, 1/1/2020 Purchase Discounts P 1,260,000 39,600 300,000 Purchase Returns and Allowances Purchases 26,400 46,200 1,320,000 Required: Compute the value of the lost merchandise. (Ending Merchandise Inventory).
E6.18 modified The inventory of Ipswich Books was destroyed by fire on March 1. From an examination of the accounting records, the following data for the first two months of the year are obtained: Sales revenue $51,000, Sales returns and allowances $1,000, Purchases $31,200, Freight-in $1,200, and Purchase returns and allowances $1,800. Determine the merchandise lost by fire, assuming: a. A beginning inventory of $20,000 and a gross profit rate of 40% on net sales. b. A beginning inventory of $30,000 and gross profit rate of 25% on cost
IV. Lisbon Pottery lost 70% of its inventory in a fire on March 25, 2020. The accounting records showed the following gross profit data for February and March. February Net sales Net purchases Freight-in Beginning inventory Ending inventory €300,000 197,800 2,900 4,500 25,200 March (to 3/25) €260,000 191,000 4,000 25,200 ? Lisbon is fully insured for fire losses but must prepare a report for the insurance company. Instructions a. Compute the gross profit rate for the month of February. b. Using the gross profit rate for February, determine both the estimated total inventory and inventory lost in the fire in March.
Problem 10-9 (AICPA Adapted)Hero Company reported inventory on December 31, 2020 atP6,000,000 based on a physical count of goods priced at cost,and before any necessary year-end adjustment relating to thefollowing:* Included in the physical count were goods billed to acustomer FOB shipping point on December 31, 2020.These goods had a cost of P125,000 and were picked up bythe carrier on January 10, 2021.Goods shipped FOB shipping point on December 28, 2020from a vendor to Hero Company were received on January4, 2021. The invoice cost was P300,000.What amount should be reported as inventory on December31, 2020?a. 5,875,000b. 6,000,000c. 6,175,000d. 6,300,000
Problem 10-17 (IAA) Audacity Company counted the ending inventory on December 31, 2020 and reported the amount of P2,000,000 before any corrections. None of the following items were included when the total amount of the ending inventory was computed: Goods located in the entity's warehouse are on consignment from another entity 150,000 Goods sold by the entity and shipped FOB destination were in transit on December 31, 2020 and received by the customer on January 2, 2021 %23 200,000 Goods purchased by the entity and shipped FŐB shipping point were in transit on December 31, 2020 and received by the entity on January 2, 2021 300,000 * Goods sold by the entity and shipped FOB shipping point were in transit on December 31, 2020 and received by the customer on January 2, 2021. 400,000 What amount of inventory should be reported on December 31, 2020? a. 2,500,000 b. 2,350,000 c. 2,900,000 d. 2,750,000
Flood damaged the merchandise inventory of SM Supermarket on July 25, 2020. You have discovered the following information from the records salvaged from the flood: Inventory, January 1, 2020 P1,960,000, Sales, January 1 - July 25, 2020 (including goods sold but not delivered to customers, P76,000) P19,530,000, Merchandise purchases including those still in transit, shipped FOB shipping point, P 138,000) P10,470,000, Mark-up on goods sold 40% of cost. The merchandise saved from the flood has an estimated value of P 163,000. What is the estimated value of inventory damaged by the flood? Present solutions in good accounting form.