Crane Company is a grocery wholesaler and is planning to expand its operations. The company has...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Crane Company is a grocery wholesaler and is planning to expand its operations. The company has asked the bank for a loan to finance the expansion. Alphonzo, the company's manager, has prepared the preliminary financial statements. The preliminary financial statements for the year ended December 31, 2021, reported the following: Current assets $111,000 Current liabilities 66,000 Sales 542,500 Cost of goods sold 233,275 Total operating expenses 102,250 The bank has requested that Crane have an independent professional accountant review the statements. You have been asked to review the statements and during your review you have discovered the following: Crane's supplier shipped $12,300 of merchandise inventory to Crane on December 31, 2021, FOB shipping point. Alphonzo indicated that he did not record the inventory for the year ended December 31, 2021, because it was not received until January 2, 2022. 1. Included in sales and accounts receivable was $7,100 for merchandise ordered by a customer that was packed and in the warehouse. The customer indicated that they might pick it up on January 10, 2022. The customer will pay for the merchandise within 30 days of pickup. The cost of the merchandise was $3,400 and was included in merchandise inventory 2. because the merchandise was still in Crane's warehouse. Crane offers its customers a full refund for merchandise returned within 15 days of purchase. Sales recorded from December 17 to December 31 were $24, 100. Typically, about 5% of sales are returned. The returned goods are scrapped and not returned to merchandise inventory. Alphonzo said that customers had not returned any merchandise from the December 17 to December 31 sales by the company's year end. Any returns from these sales will be recorded in January when the merchandise is returned and the company knows the exact amount of the returns. 3. During the last week of December, the company had run a promotional campaign in the local newspaper. The cost of the campaign was $2,300. Alphonzo recorded it as a prepaid expense because he anticipates that January 2022 sales will be higher as a result of the campaign. 4. Calculate the correct amounts for current assets, current liabilities, sales, cost of goods sold, and total operating expenses. Crane Company uses the earnings approach to recognize revenue. Current assets Current liabilities %24 Net sales %24 Cost of goods sold %24 Total operating expenses $4 %24 Crane Company is a grocery wholesaler and is planning to expand its operations. The company has asked the bank for a loan to finance the expansion. Alphonzo, the company's manager, has prepared the preliminary financial statements. The preliminary financial statements for the year ended December 31, 2021, reported the following: Current assets $111,000 Current liabilities 66,000 Sales 542,500 Cost of goods sold 233,275 Total operating expenses 102,250 The bank has requested that Crane have an independent professional accountant review the statements. You have been asked to review the statements and during your review you have discovered the following: Crane's supplier shipped $12,300 of merchandise inventory to Crane on December 31, 2021, FOB shipping point. Alphonzo indicated that he did not record the inventory for the year ended December 31, 2021, because it was not received until January 2, 2022. 1. Included in sales and accounts receivable was $7,100 for merchandise ordered by a customer that was packed and in the warehouse. The customer indicated that they might pick it up on January 10, 2022. The customer will pay for the merchandise within 30 days of pickup. The cost of the merchandise was $3,400 and was included in merchandise inventory 2. because the merchandise was still in Crane's warehouse. Crane offers its customers a full refund for merchandise returned within 15 days of purchase. Sales recorded from December 17 to December 31 were $24, 100. Typically, about 5% of sales are returned. The returned goods are scrapped and not returned to merchandise inventory. Alphonzo said that customers had not returned any merchandise from the December 17 to December 31 sales by the company's year end. Any returns from these sales will be recorded in January when the merchandise is returned and the company knows the exact amount of the returns. 3. During the last week of December, the company had run a promotional campaign in the local newspaper. The cost of the campaign was $2,300. Alphonzo recorded it as a prepaid expense because he anticipates that January 2022 sales will be higher as a result of the campaign. 4. Calculate the correct amounts for current assets, current liabilities, sales, cost of goods sold, and total operating expenses. Crane Company uses the earnings approach to recognize revenue. Current assets Current liabilities %24 Net sales %24 Cost of goods sold %24 Total operating expenses $4 %24
Expert Answer:
Answer rating: 100% (QA)
Adjustment Treatment 1 Increase current assets by 12300 Decrease COGS by 12300 Increase 12300 curr... View the full answer
Related Book For
Accounting Principles Part 3
ISBN: 978-1118306802
6th Canadian edition Volume 1
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow
Posted Date:
Students also viewed these accounting questions
-
Kamloops Company is a grocery wholesaler and is planning to expand its operations. The company has asked the bank for a loan to finance the expansion. Alphonzo, the company's manager, has prepared...
-
Kamloops Company is a grocery wholesaler and is planning to expand its operations. The company has asked the bank for a loan to finance the expansion. Alphonzo, the company's manager, has prepared...
-
Kamloops Company is a grocery wholesaler and is planning to expand its operations. The company has asked the bank for a loan to finance the expansion. Alphonzo, the companys manager, has prepared the...
-
Necked Amber purchased a bond for $1,038.90 exactly two years ago. At that time, the bond had a maturity of five years and a coupon rate of 10% (paid semi-annually). Assuming the rates below are the...
-
Jewel's home was completely destroyed by fire in 2013. The home itself had an appraised value of $185,000 before the fire. Four years ago Jewel paid $160,000 for the house and the land, with $25,000...
-
What is a fluid? How does it differ from a solid? How does a gas differ from a liquid?
-
The mean price of new homes from a sample of houses is \($180,000\) with a standard deviation of \($15,000\). The data set has a bell-shaped distribution. Using the Empirical Rule, between what two...
-
Insulation thickness for a furnace wall (Fig. 10B.6) a furnace wall consists of three layers: (i) a layer of heat-resistant or refractory brick, (ii) a layer of insulating brick, and (iii) a steel...
-
On January 1, 2025, Harrington Company has the following defined benefit pension plan balances. Projected benefit obligation Fair value of plan assets Other data related to the pension plan are as...
-
Two slender rods of negligible weight are pin-connected at C and attached to blocks A and B, each of weight W. Knowing that P = 1.260W and that the coefficient of static friction between the blocks...
-
A screw jack with a 1-in. double-thread Acme screw is used to raise a load of 10,000 lb. A plain thrust collar of 2.0 in. mean diameter is used. Coefficients of running friction are estimated as 0.13...
-
You are an audit senior and your firm audits Daicos Ltd, a large mining company that operates all over Australia. Consider the following situations that have arisen during the audit. 1. Daicos owns...
-
What is VRIO analysis for BOLT? Company Overview: Bolt is a ride-sharing service. Founded in August 3, 2013 in Tallinn, Estonia, the company has emerged as one of the most technologically...
-
What role does neuroplasticity play in the maintenance of homeostasis within the central nervous system ?
-
Harris Fabrics computes its plantwide predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 39,000 direct labor-hours would be...
-
Create a Business Plan for Women's Specialized Sports Sneakers. Must include: Executive Summary, Business Description, Industry Analysis, Marketing Plan, Operational Plan, Financial Plan, and...
-
On January 1, Year 6, Kiri Company signed a six-month, non-interest-bearing note payable for $170,000 and received $162,800 from Year 6, what amount should Kiri record for interest expense, and what...
-
Establish identity. cos( + k) = (-1)k cos , k any integer
-
Paradis Corporation has paid cash dividends for eight years in a row. The board of directors' policy requires that, in order to declare a dividend, cash provided by operating activities as reported...
-
When is it appropriate for a public company to report gains and losses on fair value adjustments in other comprehensive income?
-
How is the accounting for admission to a partnership by purchase of a partner's interest different from the accounting for admission by an investment of assets in the partnership? In your...
-
If task A is an immediate predecessor of task B, what must be true about the sched- uled timing of these two tasks?
-
Why does a project necessarily have to possess some form of deadline? What is the implication of a project without a deadline?
-
What are the likely consequences to managing a highly uncertain project in the predictive style of project management?
Study smarter with the SolutionInn App