I can\'t figure this out. Please, help me. Process In note 2, Callaway discusses

Question

I can't figure this out. Please, help me.

Process In note 2, Callaway discusses its allowance for obsolete or unmarketable inventory -a contra account against the inventory balance. Callaway does not directly disclose the balance or activity in this account in its public reports. For purposes of illustration, assume that Callaway experienced the following information in its allowance for obsolete and unmarketable inventory (in thousands) c. S10,800 13,348 11,628 Balance, December 31, 2012 Provision Write-offs, disposals and other Balance, December 31, 2013 S12,520 i. Where does this account appear on Callaway's financial statements? 11. What is the gross amount of inventory at the end of 2013? 2012? ii. What portion of the reserve for obsolete inventory do you think is attributable to each of the three types of inventory held by Callaway? d. Recreate the journal entries Callaway prepared to record the activity in the reserve for obsolete inventory account during 2013 Set up five separate T-accounts: one for each of the three inventory accounts, one for "Cost of sales" and one for "Accounts payable." Use the T-accounts to analyze inventory activity during 2013. Make the following simplifying assumptions. e.

Explanation / Answer

c.i)this account is a contra asset that appears on the balance sheet, and it goes against gross inventories

ii)gross amount of inventory

2013:$263,492+$13,348=$276,840

2012:$211,734+$13,348=$225,082

iii)obsolete inventory allowance is related to raw materials and finished goods. it is not usual for obsolete inventory to be found in work-in-progress

d)journal entry

e)T-ACCOUNTS

NOTE:THE RESERVE FOR OBSOLETE INVENTORIES IS $13,348.

IN PART e) it is said that reserve for obsolete inventories is added in finished goods , but if i add $ 13,348 the balance of finished goods dosen't match with note11 by $20 (which is $ $207,060)

which is adjusted in finished goods account by taking it as $13,328 to take the closing balance correctly

evnen cost of sales cannot be adjusted because as per question the given details are as follows:

cost of sales(2013)........................................$528,043

less:reserve for obsolete inventory.............$13,348

transferred from finished goods..................$514,695

so check the finished goods balance in note 11 and make change accordingly

Particulars Debit Credit cost of sales $13,348 reserve for obsolete inventory $13,348 reserve for obsolete inventory $11,628 inventories $11,628

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