Seemore Lens Company (SLC) sells contact lenses FOB destination. For the year en
ID: 2466940 • Letter: S
Question
Seemore Lens Company (SLC) sells contact lenses FOB destination. For the year ended December 31, the company reported Inventory of $80,000 and Cost of Goods Sold of $440,000.
Excluded from the Inventory balance are $9,000 of lenses in the warehouse, ready to send to customers on January 1. SLC reported these lenses as sold on December 31, at a price of $17,000.
Included in the Inventory balance are $3,500 of lenses that were damaged in December and will be scrapped in January, with no recoverable value.
Prepare the table showing the balances presently reported for Inventory and Cost of Goods Sold, and then displaying the adjustment(s) needed to correctly account for each of items (a)-(d), and finally determining the appropriate Inventory and Cost of Goods Sold balances. (Enter any decreases to account balances with a minus sign.)
Seemore Lens Company (SLC) sells contact lenses FOB destination. For the year ended December 31, the company reported Inventory of $80,000 and Cost of Goods Sold of $440,000.
Explanation / Answer
Inventory Cost of Goods Sold Remarks Present Balance 80000 440000 a. -12000 0 [ SLC is not the owner of goods received in consignment b. -6000 0 [stock issued for office supplies should not be included in inventory c. 9000 [Goods sold on 31.12 should not be included in inventory d. -3500 0 [Damanged goods should not be included in inventory and should be written off Appropriate Balance $58,500 $449,000