1. Of the balance of $142,000, $20,000 is incorrect because it represents goods that we didnt receive...
Question:
1. “Of the balance of $142,000, $20,000 is incorrect because it represents goods that we didn’t receive until January 5, 2021.” Follow-up: Inspection of shipping records reveals that the item was shipped on December 31, 2019 fob destination.
2. “Of the account’s $160,000 balance, we only owe $155,200 as $4,800 (3% of the total) is not due because the KeyBoard’s salesperson told us that she would give us a “special” discount beyond the normal.” Follow-up: While inspection of the sales agreement indicated no such discount arrangement, discussions with Carter Addison (controller) and Joshua Caleb (president) indicated that the salesperson had inappropriately granted such a discount to the client. On January 10, 2021, they processed the discount and credited the account for $4800.
3. We will owe the balance of $95,000 when we sell the goods for KeyBoard. We are currently holding the goods on consignment. Follow-up: Client states that the goods were shipped on December 29, 2020, on consignment, and their system properly triggers a sales invoice when goods are shipped.
4.“The balance of $140,000 is incorrect because we paid that amount in full on December 24, 2020.” Follow-up: An analysis of the cash receipts journal revealed that the check had been received in the mail on January 2nd and deposited. Also noted the check was listed on the deposit slip for January 2nd.
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Fundamentals of Investments Valuation and Management
ISBN: 978-0077283292
5th edition
Authors: Bradford D. Jordan, Thomas W. Miller