Problem 30
SP
CGS
GP
Based on
Cost
Sales
125%
100%
-100%
-75%
25%
25%
Unadjusted
AJE1
AJE2
AJE3
AJE4
AJE5A
AJE5B
Adjusted
Observations:
1. SI No. 968 is not recorded.
2. RR No. 1060 is not recorded.
AJEs
AJE1
Sales
390,000.00
AR
390,000.00
(138,000+204,000+48,000)
To reverse the recorded sale on SI 969 to 971.
No shipment = no sale. Inventory is correct.
AJE2
Purchases
54,000.00
AP
54,000.00
To record the purchase per RR1060.
Inventory is correct. Goods were included in the count.
AJE3
Inventory
192,000.00
CGS
192,000.00
To include the goods of Truck ABC 123 in the count.
Purchases are correct. Recorded per RR1063.
AJE4
Inventory
240,000.00
CGS
240,000.00
To include the goods of Truck DEF456 in the count.
Sales are correct. SI 968 was not recorded.
(300,000 / 1.25)
AJE5
Sales
AR
450,000.00
Invty
CGS
360,000.00
450,000.00
360,000.00
To reverse recorded sale per SI966.
Goods are sold FOB Dest, in transit at 12/31
AR
1,500,000.00
(390,000.00)
Sales
16,590,000.00
(390,000.00)
Purch
9,000,000.00
AP
1,200,000.00
54,000.00
54,000.00
Invty
1,800,000.00
192,000.00
240,000.00
(450,000.00)
CGS
(192,000.00)
(240,000.00)
(450,000.00)
360,000.00 (360,000.00)
660,000.00 15,750,000.00 9,054,000.00 1,254,000.00 2,592,000.00 n.a.
No. 134 - A
No. 132 - C
No. 133 - D
No. 136 - B
No. 135 - D
Goods should be included in the count (still unsold).
(450,000 / 1.25)
RR1064 - dated January 2020 because the last RR used in 2019 was RR1063.
Conclusion: The goods in Item D were received in January. They are in transit at Dec. 31, 2019.
Terms: FOB Destination -- at 12/31/19, no purchase yet. Goods are part of seller's inventory.
Purchases are correct. The client did not record RR1064 at Dec. 31, 2019.
Inventory also correct. The goods are in transit at Dec. 31 --> not included in the count.
Freight paid by client --> freight collect. This is a January 2020 already. Not recorded at Dec. 31, 2019.
Freight deducted from purchase price --> FOB Destination.
In January 2020, the following are the entries for Item D:
Jan. 2020
Purchases
1,600,000.00
AP
1,600,000.00
AP
4,000.00
Cash
Item D has no AJE.
4,000.00
Seller books
AR
Sales
Freight-out
AR
1,600,000.00
1,600,000.00
4,000.00
4,000.00