Name:

Exercise: Exercise 8-5, Recording Bad Debts

Course: Acc 422
Date:

(Inventoriable Costs—Error Adjustments) Craig Company asks you to review its December 31, 2007
adjustments to the books. The following information is given to you.

1. Craig uses the periodic method of recording inventory. A physical count reveals $234,890 of inventory on hand at Decem
No entry requried..Beginning balance 234,890

Not included in the physical count of inventory is $13,420 of merchandise purchased on December 15 from Browser. This m
December 29 and arrived in January. The invoice arrived and was recorded on December 31.
No entry needed But an adjustment + to invontory
13,420
needed

Included in inventory is merchandise sold to Champy on December 30, f.o.b. destination. This merchandise was shipped aft
recorded as a sale on account for $12,800 on December 31. The merchandise cost $7,350, and Champy received it on Jan
Adj entry need to match period. Title transfer took place in 2008. No change in Invo
Dec 31 Sales
Accounts recievable

Included in inventory was merchandise received from Dudley on December 31 with an invoice price of $15,630. The mercha
which has not yet arrived, has not been recorded.
Adj entry need to match period. Title transfer took place in 2007. No change in Invo
Dec 31 Inventory
Accounts payable

Not included in inventory is $8,540 of merchandise purchased from Glowser Industries. This merchandise was received on D
The invoice was received and recorded on December 30.
No entry needed. Adjustment of Inventory + 8,540

Included in inventory was $10,438 of inventory held by Craig on consignment from Jackel Industries.

No entry needed. Consignment is not held on inventory. Adjustment of Inventory - (10,438)

Included in inventory is merchandise sold to Kemp f.o.b. shipping point. This merchandise was shipped after it was counted
$18,900 on December 31. The cost of this merchandise was $10,520, and Kemp received the merchandise on January 5.
No entry needed. Title transefered at common carrier . Adjustment of Inventory - (10,520)

Excluded from inventory was a carton labeled “Please accept for credit.” This carton contains merchandise costing $1,500 w
had been made to the books to reflect the return, but none of the returned merchandise seemed damaged.
Adj entry need account for credit. Invontory needs to be adjusted + 1,500
Dec 31 Return and Allowance
A/R

Determine the proper inventory balance for Craig Company at December 31, 2007.
237,392
w its December 31, 2007, inventory values and prepare the necessary

inventory on hand at December 31, 2007.

mber 15 from Browser. This merchandise was shipped f.o.b. shipping point on

merchandise was shipped after it was counted. The invoice was prepared and
d Champy received it on January 3.

12,800
12,800

price of $15,630. The merchandise was shipped f.o.b. destination. The invoice,

15,630
15,630

erchandise was received on December 31 after the inventory had been counted.

stries.

shipped after it was counted. The invoice was prepared and recorded as a sale for
merchandise on January 5.

merchandise costing $1,500 which had been sold to a customer for $2,600. No entry
d damaged.
2,600
2,600
Name:
Exercise: Exercise 8-5, Recording Bad Debts
Course: Acc 422
Date:

(Determining Merchandise Amounts—Periodic) Two or more items are omitted in each of the followi
in the amounts that are missing.

 2005 2006
Sales 290,000 360,000
Sales returns 11,000 13,000
Net sales 279,000 347,000
Beginning inventory 20,000 32,000
Ending inventory 32,000
Purchases 260,000
Purchase returns and 5,000 8,000
allowances
Transportation-in 8,000 9,000
Cost of goods sold 233,000 256,000
Gross profit on sales 46,000 91,000
ed in each of the following tabulations of income statement data. Fill

2007
410,000
20,000
390,000
 ?
 ?
298,000
10,000

12,000
293,000
97,000