1-In your audit of Morgan Company, you find that a physical inventory on Decembe
ID: 2573355 • Letter: 1
Question
1-In your audit of Morgan Company, you find that a physical inventory on December 31, 2017, showed merchandise with a cost of $445,530 was on hand at that date. You also discover the following items were all excluded from the $445,530.
1.
Merchandise of $55,190 which is held by Morgan on consignment. The consignor is the Max Suzuki Company.
2.
Merchandise costing $40,830 which was shipped by Morgan f.o.b. destination to a customer on December 31, 2017. The customer was expected to receive the merchandise on January 6, 2018.
3.
Merchandise costing $48,740 which was shipped by Morgan f.o.b. shipping point to a customer on December 29, 2017. The customer was scheduled to receive the merchandise on January 2, 2018.
4.
Merchandise costing $75,050 shipped by a vendor f.o.b. destination on December 30, 2017, and received by Morgan on January 4, 2018.
5.
Merchandise costing $49,450 shipped by a vendor f.o.b. shipping point on December 31, 2017, and received by Morgan on January 5, 2018.
Based on the above information, calculate the amount that should appear on Morgan’s balance sheet at December 31, 2017, for inventory.
Inventory as on December 31, 2017
2- Pina Company has used the dollar-value LIFO method for inventory cost determination for many years. The following data were extracted from Pina’s records.
Price
Index
Ending Inventory
at Base Prices
Ending Inventory
at Dollar-Value LIFO
December 31, 2017
105
$92,490
$85,600
December 31, 2018
?
97,490
91,200
Calculate the index used for 2018 that yielded the above results.
Index used for 2018
1.
Merchandise of $55,190 which is held by Morgan on consignment. The consignor is the Max Suzuki Company.
2.
Merchandise costing $40,830 which was shipped by Morgan f.o.b. destination to a customer on December 31, 2017. The customer was expected to receive the merchandise on January 6, 2018.
3.
Merchandise costing $48,740 which was shipped by Morgan f.o.b. shipping point to a customer on December 29, 2017. The customer was scheduled to receive the merchandise on January 2, 2018.
4.
Merchandise costing $75,050 shipped by a vendor f.o.b. destination on December 30, 2017, and received by Morgan on January 4, 2018.
5.
Merchandise costing $49,450 shipped by a vendor f.o.b. shipping point on December 31, 2017, and received by Morgan on January 5, 2018.
Explanation / Answer
ans 1 Inventory as per physical count $445,530 Add: Goods in transit to the cutomers (FOB des) 40830 Add: Goods in transit from Vendor (FOB shipping) 49450 Inventory to be reported $535,810 1,3 and 4 will be excluded and it is correct as that is not part of the inventory ans 2 Increase at base prices=97490-92490 $5,000 Incraese in dollar value LIFO=(91200-85600) 5600 5000*index=5600 Index=5600/5000 1.12 Index =112 Index used in 2018 112
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.