1. (LO 1) Matt Clark, an auditor with Grant CPAS, is performing a review of Parson...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
1. (LO 1) Matt Clark, an auditor with Grant CPAS, is performing a review of Parson Company's inventory account. Parson did not have a good year and top management is under pressure to boost reported income. According to its records. the inventory balance at year-end was $600,000. However, the following information was not considered when determining that amount. 1. The physical count did not include goods purchased by Parson with a cost of $30,000 that were shipped FOB destination on December 28 and did not arrive at Parson's warehouse until January 3. 2. Included in the company's count were goods with a cost of $150,000 that the company is hold- ing on consignment. The goods belong to Alvarez Corporation. 3. Included in the inventory account was $21,000 of office supplies that were stored in the ware- house and were to be used by the company's supervisors and managers during the coming year. 4. The company received an order on December 28 that was boxed and was sitting on the loading dock awaiting pick-up on December 31. The shipper picked up the goods on January I and deliv- ered them on January 6. The shipping terms were FOB shipping point. The goods had a selling price of $29,000 and a cost of $19,000. The goods were not included in the count because they were sitting on the dock. 5. On December 29, Parson shipped goods with a selling price of $56,000 and a cost of $40,000 to Decco Corporation FOB shipping point. The goods arrived on January 3. Decco had only ordered goods with a selling price of $10,000 and a cost of $6,000. However, a Parson's sales manager had authorized the shipment and said that if Decco wanted to ship the goods back next week, it could. 6. Included in the count was $27,000 of goods that were parts for a machine that the company no longer made. Given the high-tech nature of Parson's products, it was unlikely that these obsolete parts had any other use. However, management would prefer to keep them on the books at cost, "since that is what we paid for them, after all." Instructions Prepare a schedule to determine the correct inventory amount. Provide explanations for each item above, saying why you did or did not make an adjustment for each item. 1. (LO 1) Matt Clark, an auditor with Grant CPAS, is performing a review of Parson Company's inventory account. Parson did not have a good year and top management is under pressure to boost reported income. According to its records. the inventory balance at year-end was $600,000. However, the following information was not considered when determining that amount. 1. The physical count did not include goods purchased by Parson with a cost of $30,000 that were shipped FOB destination on December 28 and did not arrive at Parson's warehouse until January 3. 2. Included in the company's count were goods with a cost of $150,000 that the company is hold- ing on consignment. The goods belong to Alvarez Corporation. 3. Included in the inventory account was $21,000 of office supplies that were stored in the ware- house and were to be used by the company's supervisors and managers during the coming year. 4. The company received an order on December 28 that was boxed and was sitting on the loading dock awaiting pick-up on December 31. The shipper picked up the goods on January I and deliv- ered them on January 6. The shipping terms were FOB shipping point. The goods had a selling price of $29,000 and a cost of $19,000. The goods were not included in the count because they were sitting on the dock. 5. On December 29, Parson shipped goods with a selling price of $56,000 and a cost of $40,000 to Decco Corporation FOB shipping point. The goods arrived on January 3. Decco had only ordered goods with a selling price of $10,000 and a cost of $6,000. However, a Parson's sales manager had authorized the shipment and said that if Decco wanted to ship the goods back next week, it could. 6. Included in the count was $27,000 of goods that were parts for a machine that the company no longer made. Given the high-tech nature of Parson's products, it was unlikely that these obsolete parts had any other use. However, management would prefer to keep them on the books at cost, "since that is what we paid for them, after all." Instructions Prepare a schedule to determine the correct inventory amount. Provide explanations for each item above, saying why you did or did not make an adjustment for each item.
Expert Answer:
Answer rating: 100% (QA)
i Schedule to determine the correct inventory amount Particulars Amount OMR Ending inventory as repo... View the full answer
Related Book For
Financial and managerial accounting
ISBN: 978-1118016114
1st edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Posted Date:
Students also viewed these accounting questions
-
TUTORIAL : CONSUMPTION AND SAVING Given the consumption function is C = 100 + 0.70Yd , find the saving function . Draw and explain about curve for consumption function and saving function. Assume...
-
On December 28, Hadley Company purchased goods FOB destination at a cost of $38,000. The goods arrived at Hadleys warehouse and were unloaded on January 5. Hadleys bookkeeper is unsure whether these...
-
How would the loan balance at the end of year 7 change if the payments increase by 5 percent each year instead of 7.5 percent?
-
A particular leadcadmium alloy is 8.0% cadmium by mass. What mass of this alloy, in grams, must you weigh out to obtain a sample containing 7.25 x 10 23 Cd atoms?
-
Following are the 2010 year-end balances before adjustments: Accounts receivable (AR) ........ $ 80,000 Allowance for uncollectible accounts .. $ (2,000) Net sales ............. $250,000 Using the...
-
The specific heat of copper is 0.385 J/g C. How much heat energy in kilojoules is required to raise the temperature of 454 g of copper from 40.0C to 75.0C?
-
How does ICT impact communications?
-
(Assumptions, Principles, and Constraints) Presented below are a number of operational guidelines and practices that have developed over time. Select the assumption, principle, or constraint that...
-
Let A = 3 Find B = sin(A) Find C = A Find D=C2 Find ECC Find F = C.*C % Your script goes here.
-
Eruptions of the Old Faithful geyser in Yellowstone National Park typically last from 1.5 to 5 minutes. Between eruptions are dormant periods, which typically last from 50 to 100 minutes. A dormant...
-
For the year, Uptowne Furniture had sales of $818,790, costs of $748,330, and interest paid of $24,450. The depreciation expense was $56,100 and the tax rate was 34 percent. At the beginning of the...
-
Your rate of return expectations for the stock of Kayleigh Cosmetics Company during the next year are: KAYLEIGH COSMETICS CO. Possible Rate of Return O: -0.45 -0.25 0.10 0.20 0.30 0.50 Your rate of...
-
If you buy a 25-yr, 6% annual coupon bond for $883.46 (when YTM is 7%) and plan to hold it for 15 yrs. If you forecast the YTM will be 7.50% when it is sold in 15 yrs, while the reinvestment rate is...
-
An investor wishes to construct a portfolio by borrowing 35 percent of his original wealth and investing all the money in a stock index. The return on the risk-free asset is 4.0 percent, and the...
-
Your bank statement shows a balance of $686. Your checkbook register shows a balance of $453. You earned interest of $21 and had a service charge of $7. There are no outstanding deposits. What is the...
-
Your bank card has an APR of 18% and there is a 2% fee for cash advances. The bank starts charging interest on cash advances immediately. You get a cash advance of $1,200 on the first day of the...
-
Debbie Berger's salary is $60,000, and she is covered by her employer's noncontributory, nondiscriminatory group term life insurance policy in the amount of $90,000. Identify the correct statement...
-
Burberrys competitive advantage is through its differentiation strategy. What risk should Burberry remain aware of?
-
Both the gross profit method and the retail inventory method are based on averages. For each method, indicate the average used, how it is determined, and how it is applied.
-
Glendo Farm Supply Company manufactures and sells a pesticide called Snare. The following data are available for preparing budgets for Snare for the first 2 quarters of 2014. 1. Sales: quarter 1,...
-
At the high and low levels of activity during the month, direct labor hours are 90,000 and 40,000, respectively. The related costs are $165,000 and $100,000. What are the fixed and variable costs at...
-
The maximum velocity attained by the mass of a simple harmonic oscillator is \(10 \mathrm{~cm} / \mathrm{s}\), and the period of oscillation is \(2 \mathrm{~s}\). If the mass is released with an...
-
A spring-mass system has a natural frequency of \(10 \mathrm{~Hz}\). When the spring constant is reduced by \(800 \mathrm{~N} / \mathrm{m}\), the frequency is altered by \(45 \%\). Find the mass and...
-
Three springs and a mass are attached to a rigid, weightless bar \(P Q\) as shown in Fig. 2.51. Find the natural frequency of vibration of the system. 0000 0000 k 12. 13 m + FIGURE 2.51 Rigid bar...
Study smarter with the SolutionInn App