r 31 Capwell Corporation uses a periodic inventory system. The company\'s ending
ID: 2472989 • Letter: R
Question
r 31 Capwell Corporation uses a periodic inventory system. The company's ending inventory on 2016, its fiscal-year end, based on a physical count, was determined to be $330,000. Car trial balance also showed the following account balances: Purchases, $660,000; Accou $230,000; Accounts receivable, $245,000; Sales revenue, $840,000. on D adjusted The internal audit department discovered the following items: but not recorded as a purchase. $34,000. The correct amount was included in the ending inventory. The merchandise arrived on January 3, 2017. The purchase and related accounts payable were recorded 1. Goods valued at $36,000 held on consignment from Dix Company were included in the physical count 2. Purchases from Xavier Corporation were incorrectly recorded at $43,000 instead of the correct amount of 3. Goods that cost $29,000 were shipped from a vendor on December 28, 2016, terms f.o.b. destination. 4. One inventory item was incorrectly included in ending inventory as 140 units, instead of the correct 5. The 2015 balance sheet reported inventory of $392,000. The internal auditors discovered that a 6. Goods shipped to a customer f.o.b. destination on December 25, 2016, were received by the customer 7. Goods shipped from a vendor f.o.b, shipping point on December 27, 2016, were received on January 3, in 2016. amount of 1,200 units. This item cost $30 per unit mathematical error caused this inventory to be understated by $66,000. This amount is considered to be material on January 4, 2017. The sales price was $44,000 and the merchandise cost $24,000. The sale and corresponding accounts receivable were recorded in 2016. 2017. The merchandise cost $22,000. The purchase was not recorded until 2017 Required 1. Determine the correct amounts for 2016 ending inventory, purchases, accounts payable, sales revenue, and accounts receivable. Ending inventory$371,800 Purchases Accounts payable Accounts receivable $ 201,000 Sales revenue $796,000Explanation / Answer
Answer to the Question
No.3
2015 before tax income was reduced by $66,000.
Particulars Inventories Purchase Account Payable Account Receivable Sales Before Rectification Entries 330,000 660,000 230,000 245,000 840,000 Consigned Stock included in stock (36,000) - - - - Inventory wrongly posted - (9,000) - - - Goods in Transit accounted in Books - (29,000) (29,000) - Inventory taken 140 instead of 1200 @ $30 31,800 - - - - Finding by Internal auditor(Understated By $55000) 66,000 Revised Balance as Dec 16 391,800 622,000 201,000 245,000 840,000