Craig Company asks you to review its December 31, 2014, inventory values and pre
ID: 2416609 • Letter: C
Question
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. Craig uses the periodic method of recording inventory. A physical count reveals $234,090 of Inventory on hand at December 31 2014 Not included in the physical count of inventory is $13,420 of merchandise purchased on December 15 from Browser. This merchandise was shipped f.o.b. shipping point on December 24 and arrived in Janus. December 31. Included in Inventory is merchandise sold to Champy on December 30, f.o.b. destination. This merchandise was counted. The invoice was prepared and recorded as a sale on account for$12,800 on December 31. The merchandise cost $7,330, and Champy received it on January 3. Included in inventory was merchandise received from Dudley on December 31 with an invoice price of $13,430. The merchandise was shipped f.o.b. destination. The invoice which has not yet arrived, has not been recorded. Not included in inventory is $8,340 of merchandise purchased from Glowser Industries. This merchandise was received on December 31 after the inventory had been counted. The merchandise was received and recorded on December 30. Included in inventory was $10,438 of inventory held by Craig on consignment from Jacket Industries. Included in inventory.s merchandise sold to Kemp f.o.b. shipping point. This merchandise was shipped after It was invoice was prepared and recorded as a sale for $18,900 on December 31. The cost of this merchandise was $10,320, and received the merchandise on January 5. Excluded from inventory was a carton abated "Please accept for credit." This carton contains merchandise $1,300 had been sold to a customer for $2,600. No entry had been made to the books to reflect the return, but none of the returned merchandise seemed damaged.Explanation / Answer
a.
b.
Entry 3
Dr. Sales A/c $12,800
Cr. Accounts Receivable A/c $12,800
Entry 4
Dr. Purchases (Inventory) A/ $15,630
Cr. Accounts Payable A/c $15,630
Entry 8
Dr. Sales Returns A/c $2,600
Cr. Accounts Receivable A/c $2,600
Inventory December 31, 2002 (unadjusted) $234,890 Entery 2 13,420 Entery 3 0 Entery 4 0 Entery 5 8,540 Entery 6 (10,438) Entery 7 (10,520) Entery 8 1,500 Inventory December 31, 2002 (adjusted) $237,392