Problem 1 (25 minutes) The Avesco Company Fiscal period ends on December 31, 2020. Shortly thereafter...

  
 

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Problem 1 (25 minutes) The Avesco Company Fiscal period ends on December 31, 2020. Shortly thereafter you, as the accountant checked the financial reports. During the course of your checking, you have found numer errors among which are the following: 1. Merchandise in transit costing $10,000 was excluded from inventory. The goods had been shipped by the vendor f.o.b. shipping point. The vendee has not yet recorded the purchase. 2. Merchandise costing $9,000 was included in the final inventory. The goods are to be returned because of incorrect specifications. The merchandise had been recorded as a purchase. 3. Merchandise costing $15,000 was excluded from inventory. The goods had been segregated in the warehouse but there was no contract of sale, a mere purchase order from the customer. The sale was recorded at $20,000. 4. Merchandise costing $5,000 was out on consignment and was included in the inventory. The merchandise had been recorded as a sale, $8,000. 5. Merchandise costing $12,000 and sold for $15,000 was included in the inventory. The goods are shipped f.o.b. shipping point. The sale was not recorded. 6. Merchandise costing $8,000 was excluded from inventory and the sale was not recorded. The goods had been segregated in the warehouse but there was no contract of sale. 7. Merchandise costing $13,000 was included in the inventory and the purchase was recorded. The goods had been shipped by the vendor f.o.b. destination. The invoice was received but the goods are in transit. 8. Merchandise in transit costing $10,000 was excluded from inventory and the purchase had not been recorded. The term is f.o.b. shipping point. 9. Merchandise costing $3,000 was received on consignment. This was included in the inventory. 10. Merchandise costing $7,000 and sold for $10,000 is returned by the customer. The sale is recorded but not the return. The merchandise is included in the inventory. The financial statements (uncorrected) showed the following: $ 70,000 Inventory Accounts receivable Accounts payable 80,000 75,000 Net sales 300,000 Net purchases 200,000 Net income 20,000 Required: Required: Prepare a worksheet with one column for each of the account above (starting with uncorrected balances as shown below) showing the corrections to each balance and the corrected. Avesco Company Working Paper Year ended December 31, 2020 Accounts Accounts Net Net Net No. Inventory Receivable Payable Sales Purchases Income Uncorrected Bal. Adjustments $70,000 $80,000 $75,000 $300,000 $200,000 $20,000 Problem 1 (25 minutes) The Avesco Company Fiscal period ends on December 31, 2020. Shortly thereafter you, as the accountant checked the financial reports. During the course of your checking, you have found numer errors among which are the following: 1. Merchandise in transit costing $10,000 was excluded from inventory. The goods had been shipped by the vendor f.o.b. shipping point. The vendee has not yet recorded the purchase. 2. Merchandise costing $9,000 was included in the final inventory. The goods are to be returned because of incorrect specifications. The merchandise had been recorded as a purchase. 3. Merchandise costing $15,000 was excluded from inventory. The goods had been segregated in the warehouse but there was no contract of sale, a mere purchase order from the customer. The sale was recorded at $20,000. 4. Merchandise costing $5,000 was out on consignment and was included in the inventory. The merchandise had been recorded as a sale, $8,000. 5. Merchandise costing $12,000 and sold for $15,000 was included in the inventory. The goods are shipped f.o.b. shipping point. The sale was not recorded. 6. Merchandise costing $8,000 was excluded from inventory and the sale was not recorded. The goods had been segregated in the warehouse but there was no contract of sale. 7. Merchandise costing $13,000 was included in the inventory and the purchase was recorded. The goods had been shipped by the vendor f.o.b. destination. The invoice was received but the goods are in transit. 8. Merchandise in transit costing $10,000 was excluded from inventory and the purchase had not been recorded. The term is f.o.b. shipping point. 9. Merchandise costing $3,000 was received on consignment. This was included in the inventory. 10. Merchandise costing $7,000 and sold for $10,000 is returned by the customer. The sale is recorded but not the return. The merchandise is included in the inventory. The financial statements (uncorrected) showed the following: $ 70,000 Inventory Accounts receivable Accounts payable 80,000 75,000 Net sales 300,000 Net purchases 200,000 Net income 20,000 Required: Required: Prepare a worksheet with one column for each of the account above (starting with uncorrected balances as shown below) showing the corrections to each balance and the corrected. Avesco Company Working Paper Year ended December 31, 2020 Accounts Accounts Net Net Net No. Inventory Receivable Payable Sales Purchases Income Uncorrected Bal. Adjustments $70,000 $80,000 $75,000 $300,000 $200,000 $20,000

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