A retail company recently completed a physical count of ending merchandise inventory to use in preparing adjusting entries. In determining the cost of the counted inventory, company employees failed to consider that $5,000 of incoming goods had been shipped by a supplier on December 31 under an FOB shipping point agreement. These goods had been recorded in Merchandise Inventory as a purchase, but they were not included in the physical count because they were in transit. Explain how this overlooked fact affects the company’s financial statements and the following ratios: return on assets, debt ratio, current ratio, profit margin ratio, and acid-test ratio.
Answer to relevant QuestionsCompute the current ratio and acid-test ratio for each of the following separate cases. Which company case is in the best position to meet short-term obligations? Explain. Refer to Exercise and prepare journal entries to record each of the merchandising transactions assuming that the periodic inventory system is used. In Exercise, Journalize the following merchandising transactions for Chiller ...The following unadjusted trial balance is prepared at fiscal year-end for Helix Company. Rent expense and salaries expense are equally divided between selling activities and the general and administrative activities. Helix ...Refer to Best Buy’s financial statements in Appendix A to answer the following. Required 1. Assume that the amounts reported for inventories and cost of sales reflect items purchased in a form ready for resale. Compute the ...Rosen Company reports beginning inventory of 10 units at $28 each. Every week for four weeks it purchases an additional 10 units at respective costs of $30, $31, $32, and $34 per unit for weeks 1 through 4. Calculate the ...
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