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The following
data were found during your audit:
Goods in transit shipped FOB destination by a shipper in the amount of 20,000 had been
excluded from the inventory, and further testing revealed that the purchase had been recorded.
Goods costing 10,000 had been received, included in inventory, and recorded as a purchase.
However, your inspection revealed that the goods were found to be defective and would be
immediately returned.
Materials costing 50,000 and billed on December 30 at a selling price of 64,000, had been
segregated in the warehouse for inventory as a signed purchase order had been received from
the customer. Terms, FOB destination.
Sales 64,000
Accounts Receivable 64,000
Inventory 50,000
Cost of goods Sold 50,000
Goods costing 14,000 was out on consignment with M since the monthly statement from M, listed
those materials on hand, the items had been excluded from the final inventory and invoiced on
December 31 at 16,000.
Sales 16,000
Accounts Receivable 16,000
Inventory 14,000
Cost of goods Sold 14,000
The sale of 30,000 worth of materials and costing 24,000 had been shipped FOB shipping point
on December 31. However, this inventory was found to be included in the final inventory.
COGS 24,000
MI 24,000
Further inspection of the client’s records revealed the following December 31, 2021 balances: Inventory,
220,000; Accounts receivable, 104,000; Accounts payable, 138,000; Sales, 1,010,000; Purchases,
640,000; Net Income, 180,400.
a. The adjusted balance of inventory at December 31, 2021?
220k-10k+50K+14K-24K= 250K