SOLUTION

Bird Company
Inventory Accounts payable Net sales
Unadjusted balances 1,870,000 1,415,000 9,693,400
Adjustments:
1 -78,500
2 93,000 93,000
3 27,000
4 49,000 -67,800
5 29,400
6 31,200
7 36,000
8 16,000 32,000
2,086,200 1,576,000 9,576,500

Q1-1. Bird's Dec. 31, 2018 inventory should be increased by

Inventory - per audit 2,086,200
Inventory - per count 1,870,000
Net adjustment - Increase A. 216,200

Q1-2. Bird's account payable balance at Dec. 31, 2018 should be

Accounts payable - per audit 1,576,000
Accounts payable - per book 1,415,000
Net adjustment - Increase D. 161,000

Q1-3. The amount of net sales to be reported on Bird's income statement for the year ended Dec. 31, 2018 should
Net sales
Unadjusted balance 9,693,400
Adjustments:
#1 -78,500
#4 -67,800
#5 29,400
Net sales - Dec. 31, 2018 B. 9,576,500

Q1-4. Bird's statement of financial position at Dec. 31, 2018 should report accounts payable of
Accounts payable
Unadjusted balance 1,415,000
Adjustments:
#2 93,000
#7 36,000
#8 32,000
Acc. payable - Dec. 31, 2018 A. 1,576,000

Q1-5. The amount of inventory to be reported on Bird's Dec. 31, 2018, statement of financial position should be
Inventory
Unadjusted balance 1,870,000
Adjustments:
#2 93,000
#3 27,000
#4 49,000
#6 31,200
#8 16,000
Inventory - Dec. 31, 2018 B. 2,086,200
d Dec. 31, 2018 should be

al position should be
 SOLUTION

Q2-1. What working paper adjustment should be made at the end of the current year for item no. 1?

B. Retained earnings 25,000

Purchases 25,000

Q2-2. What working paper adjustment to correct the rror described in item no. 3 should include a debit to

A. Accounts receivable 43,000

Sales 43,000

Q2-3. The company's statement of financial position as of the end of the current year should be shoe inventory o
Inventory - Dec. 31, 2018 100,000
#5 18,000
#6 12,000
Adjusted Inventory - Dec. 31, 2018 A. 130,000

Q2-4. What is the net adjustment to purchases of the current year?

Purchases
Adjustments:
#1 -25,000
#4 15,000
#6 12,000
Net adjustment to purchases C. 2,000 increase

Q2-5. The cost of goods sold for the current year is

Inventory - beginning (80k + 13,200) 93,200
Add: Purchases (1.6M + 2k) 1,602,000
COGS available for sale 1,695,200
Less: Inventory - ending (100k + 30k) 130,000
Cost of goods sold D. 1,565,200
year for item no. 1?

should include a debit to

year should be shoe inventory of