*Shipped to consignee. You are engaged to audit the Ferrick Corporation for the
ID: 2448478 • Letter: #
Question
*Shipped to consignee.
You are engaged to audit the Ferrick Corporation for the year ended December 31, 2013. Only
merchandise shipped by the Ferrick Corporation to customers up to and including December 30, 2013, has
been eliminated from inventory. The inventory as determined by physical inventory count has been
recorded on the books by the company’s controller. No perpetual inventory records are maintained. All
sales are made on an FOB–shipping point basis. You are to assume that all purchase invoices have been
correctly recorded.
The following lists of sales invoices are entered in the sales journal for the months of December 2013 and
January 2014, respectively.
Required:
Prepare necessary adjusting entries for the following events.
Sales Invoice Amount Sales Invoice Date Cost of Merchandise Sold Date Shipped December 2013 a. $ 3,000 Dec. 21 $ 2,000 Dec. 31 b. 2,000 Dec. 31 800 Dec. 13 c. 1,000 Dec. 29 600 Dec. 30 d. 4,000 Dec. 31 2,400 Jan. 9 e. 10,000 Dec. 30 5,600 Dec. 29* January 2014 f. $ 6,000 Dec. 31 $ 4,000 Dec. 30 g. 4,000 Jan. 2 2,300 Jan. 2 h. 8,000 Jan. 3 5,500 Dec. 31*Shipped to consignee.
You are engaged to audit the Ferrick Corporation for the year ended December 31, 2013. Only
merchandise shipped by the Ferrick Corporation to customers up to and including December 30, 2013, has
been eliminated from inventory. The inventory as determined by physical inventory count has been
recorded on the books by the company’s controller. No perpetual inventory records are maintained. All
sales are made on an FOB–shipping point basis. You are to assume that all purchase invoices have been
correctly recorded.
The following lists of sales invoices are entered in the sales journal for the months of December 2013 and
January 2014, respectively.
Required:
Prepare necessary adjusting entries for the following events.
Explanation / Answer
f. Goods are invoiced and despatched on january sinca all risk and reward associated with goods are transfered the revenue should be booked in December it self.
Reverse the slaes entry made in January and pass the following entry in December.
Accounts Receivable Dr 6,000
To Sales 6,000
a. Goods invoiced on december 21 and shipped on Dec 31. It should be eliminated from inventory. Pass the following adjustment entry.
Cost of Sales Dr 2,000
To Inventory 2,000
d. Goods invoiced on Dec 31 and shipped on jan 09 . The inventory should be eliminated and cost of sales to be booked
Cost of Sales Dr 2,400
To Inventory 2,400
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