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1'8-2 (Inventory Adjustments) James T. Kirk Company, a manufacturer of small tools

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Question;1'8-2 (Inventory Adjustments) James T. Kirk Company, a manufacturer of small tools, provided thefollowing information from its accounting records for the year ended December 31, 2007.Inventory at December 31, 2007 (based on physical count of goods in Kirk's plant, at cost, on December 31, 2007) is $1,520,000Accounts payable at December 31, 2007 is 1,200,000Net sales (sales less sales returns) is 8,150,0001. Included in the physical count were tools billed to a customer f.o.b. shipping point on December31,2007. These tools had a cost of $31,000 and were billed at $40,000. The shipment was on Kirk'sloading dock waiting to be picked up by the common carrier.2. Goods were in transit from a vendor to Kirk on December 31, 2007. The invoice cost was $71,000,and the goods were shipped f.o.b. shipping point on December 29, 2007.3. Work in process inventory costing $30,000 was sent to an outside processor for plating on December30, 2007.4. Tools returned by customers and held pending inspection in the returned goods area on December31, 2007, were~ included in the physical count. On January 8, 2008, the tools costing $32,000were inspected and returned to inventory. Credit memos totaling $47,000 were issued to thecustomers on the same date.5. Tools shipped to a customer f.o.b. destination on December 26, 2007, were in transit at December31,2007, and had a cost of $21,000. Upon notification of receipt by the customer on January 2, 2008,Kirk issued a sales invoice for $42,000.6. Goods, with an invoice cost of $27,000, received from a vendor at 5:00 p.m. on December 31, 2007,were recorded on a receiving report dated January 2, 2008. The goods were not included in thephysical count, but the invoice was included in accounts payable at December 31, 2007.7. Goods received from a vendor on December 26, 2007, were included in the physical count. However,the related $56,000 vendor invoice was not included in accounts payable at December 31,2007, because the accounts payable copy of the receiving report was lostInstructions: for each item, decide what the "US" entry should be. Assume the BTP for 2007 was madeand 2007 books are open.

 

Paper#38929 | Written in 18-Jul-2015

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