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The inventories control account balance of St George Fashions at 30 June 2023 was $110 510 using the perpetual method. A physical count conducted on that day found inventories on hand worth $110 100. Net realisable value for each inventories item held for sale exceeded cost. An investigation of the discrepancy revealed the following. • Goods worth $3300 held on consignment for Rockhampton Accessories had been included in the physical count.• Goods costing $600 were purchased on credit from Springbrook Ltd on 27 June 2023 on FOB shipping terms. The goods were shipped on 28 June 2023 but, as they had not arrived by 30 June 2023, were not included in the physical count. The purchase invoice was received and processed on 30 June 2023.• Goods costing $1200 were sold on credit to Noosa Pty Ltd for $1950 on 28 June 2023 on FOB destination terms. The goods were still in transit on 30 June 2023. The sales invoice was raised and processed on 29 June 2023.• Goods costing $1365 were purchased on credit (FOB destination) from Launceston Handbags on 28 June 2023. The goods were received on 29 June 2023 and included in the physical count. The purchase invoice was received on 2 July 2023.• On 30 June 2023, St George Fashions sold goods costing $3150 on credit (FOB shipping) terms to Kurnell’s Boutique for $4800. The goods were dispatched from the warehouse on 30 June 2023 but the sales invoice had not been raised at that date.• Damaged inventories valued at $1325 were discovered during the physical count. These items were still recorded on 30 June 2023 but were omitted from the physical count records pending their write-off. Required 1. Prepare any journal entries necessary on 30 June 2023 to correct any errors and to adjust inventories. 2. i) What does the term ‘net realisable value’ mean?2. ii) What sources of evidence could a company use to determine net realisable value?2. iii)What action should a company take at year end if some of its inventory items have declined in value while other inventory items have increased in value? Why?
Supreeta N.
Sales and purchase-related transactions using perpetual inventory system The following were selected from among the transactions completed by Essex Company during July of the current year: July 3. Purchased merchandise on account from Hamling Co., list price $93,000, trade discount 30%, terms FOB shipping point, 2/10, n/30, with prepaid freight of $920 added to the invoice. 5. Purchased merchandise on account from Kester Co., $50,100, terms FOB destination, 2/10, n/30. 6. Sold merchandise on account to Parsley Co., $16,130, terms n/15. The cost of the goods sold was $10,300. 7. Returned merchandise with an invoice amount of $11,900 purchased on July 5 from Kester Co. 13. Paid Hamling Co. on account for purchase of July 3. 15. Paid Kester Co. on account for purchase of July 5, less return of July 7. 21. Received cash on account from sale of July 6 to Parsley Co. 21. Sold merchandise with a list price of $250,630 to customers who used MasterCard and who redeemed $8,100 of point-of-sale coupons. The cost of the goods sold was $143,640. 22. Sold merchandise on account to Tabor Co., $56,200, terms n/30. The cost of the goods sold was $36,340. 23. Sold merchandise for cash, $35,900. The cost of the goods sold was $23,650. 28. Paid Parsley Co. a cash refund of $5,620 for returned merchandise from sale of July 6. The cost of the returned merchandise was $3,320. 31. Paid MasterCard service fee of $3,630. 31. During July, printed a coupon with each customer's sales receipt for $1 off the customer's next purchase of over $10. The coupons may be redeemed during August. Of the total of 33,000 coupons printed, it is estimated that 60% will be redeemed. Required: 1. Journalize the transactions. If an amount box does not require an entry, leave it blank.
Akash M.
A series of computer and backup system failures caused the loss of most of the company records at Stotter, Incorporated. Information technology consultants for the company could recover only a few fragments of the company's factory ledger for July as follows: Materials Inventory Debit Credit Beginning Balance (7/1) $140,000 $232,000 Work-in-Process Inventory Debit Credit Beginning Balance (7/1) $23,200 Finished Goods Inventory Debit Credit Ending Balance (7/31) $94,500 $2,250 Cost of Goods Sold Debit Credit $198,000 Manufacturing Overhead Control Debit Credit Accounts Payable (Materials) Debit Credit $185,300 $39,400 Ending Balance (7/31) Further investigation and reconstruction from other sources yielded the following additional information: - Based on records for January through June, overhead is applied at the rate of $24 per direct labor-hour. - The production superintendent's cost sheets showed only one job in Work-in-Process Inventory on July 31. Materials of $15,750 had been added to the job, and 300 direct labor-hours had been expended at $30 per hour. - The employment department has verified that there are no variations in pay rates among direct-labor employees. - No indirect materials were issued from inventory during the period. - The controller had just allocated the underapplied overhead to the Cost of Goods Sold, Finished Goods Inventory, and Work-in-Process Inventory. (This allocation is done monthly at Stotter, Incorporated and is based on account balances.) The controller remembers making the $2,250 entry in the Finished Goods Inventory as a part of the allocation and that the total underapplied overhead was $15,000. - Data used in a study on inventory levels at Stotter, Incorporated indicate that the finished goods inventory increased by $21,500 in July. Required: Determine the following amounts: A. Work-in-process inventory, July 31, before allocation of underapplied overhead. B. Cost of goods sold for July, before allocation of underapplied overhead. C. Direct materials issued from inventory during July. D. Materials Inventory ending balance on July 31, after the underapplied overhead has been allocated. A. Work in process $ B. Cost of goods sold $ C. Direct material issued $ D. Material inventory ending balance $
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