Seemore Lens Company (SLC) manufactures and sells contact lenses. For the year e
ID: 2468321 • Letter: S
Question
Seemore Lens Company (SLC) manufactures and sells contact lenses. For the year ended December 31, the company reported Inventory of $71,000 and Cost of Goods Sold of $422,000. a. Included in Inventory (and Accounts Payable) are $10,200 of lenses held on consignment. b. Included in the Inventory balance are $5,100 of office supplies held in SLC’s warehouse. c. Excluded from the Inventory balance are $8,100 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 $15,200. d. Included in the Inventory balance are $3,050 of lenses that were damaged in December and will be scrapped in January, with no recoverable value. Required: For each item, (a–d), prepare the journal entry to correct the balances presently reported.
Explanation / Answer
Journal Entry to correct the balance sheet Debit Credit a) Account Payable 10200 TO Inventory 10200 (Being amount corrected on Inventory held on consingment) b) office Supplies 5100 To Inventory 5100 ( Being amount of Office supplies wrongly booked in inventory now corrected) c) Inventory 8100 TO Cost of goods sold 8100 (amount of inventory wrongly booked in sales now reveresed) Sales 15200 To Account receviable 15200 (being amount of Sales Reversal) d) Provision for Damange Inventory 3050 Exp Account TO Provision for damage inventoy 3050 Liability Account (need to Net off inventory in Balance sheet) (being amount provided for damage inventory)