Craig Company asks you to review its December 31, 2014, inventory values and pre

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.

8.Excluded from inventory was a carton labeled “Please accept for credit.” This carton contains merchandise costing $2,171 which had been sold to a customer for $3,762. No entry had been made to the books to reflect the return, but none of the returned merchandise seemed damaged.

Determine the proper inventory balance for Craig Company at December 31, 2014.

1. Craig uses the periodic method of recording inventory. A physical count reveals $339,886 of inventory on hand at December 31, 2014. 2. Not included in the physical count of inventory is $19,419 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 $18,522 on December 31. The merchandise cost $10,635, and Champy received it on January 3. 4. Included in inventory was merchandise received from Dudley on December 31 with an invoice price of $22,617. 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 $12,357 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 $15,104 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 $27,348 on December 31. The cost of this merchandise was $15,222, and Kemp received the merchandise on January 5. 8.

8.Excluded from inventory was a carton labeled “Please accept for credit.” This carton contains merchandise costing $2,171 which had been sold to a customer for $3,762. No entry had been made to the books to reflect the return, but none of the returned merchandise seemed damaged.

Determine the proper inventory balance for Craig Company at December 31, 2014.

Inventory balance as on December 31, 2014

$

Explanation / Answer

Answer

Note

Inventory of Craig company as on December 31, 2014

Figures in $

Particulars

Amount

Inventory on hand at December 31, 2014

339886

Not included merchandise purchased on December 15 from Browser.

0

Included Inventory merchandise sold to Champy

0

Included merchandise received from Dudley on December 31

0

Not included merchandise purchased from Glowser Industries

12357

Included inventory held by Craig on consignment from Jackel Industries.

-15104

Included merchandise sold to Kemp f.o.b. shipping point

0

Return of goods from customers

2171

Adjusted Inventory balance for Craig Company at December 31, 2014

339310

Figures in $

Particulars

Amount

Inventory on hand at December 31, 2014

339886

Not included merchandise purchased on December 15 from Browser.

0

Included Inventory merchandise sold to Champy

0

Included merchandise received from Dudley on December 31

0

Not included merchandise purchased from Glowser Industries

12357

Included inventory held by Craig on consignment from Jackel Industries.

-15104

Included merchandise sold to Kemp f.o.b. shipping point

0

Return of goods from customers

2171

Adjusted Inventory balance for Craig Company at December 31, 2014

339310

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