ACCOUNTING-F’15 ACCT 2301-N 01 / 06 Ch 6 Homework Part 1

Exercise 6-2Page 1 of 2Print by: JAIME VYKUKALF’15 ACCT2301-N01 / 06 Ch 6 Homework Part 1*Exercise 6-2Rachel Warren, an auditor with Laplante CPAs, is performing a review of Schuda Company’s inventoryaccount. Schuda did not have a good year, and top management is under pressure to boost reportedincome. According to its records, the inventory balance at year-end was $824,000. However, the followinginformation was not considered when determining that amount.Prepare a schedule to determine the correct inventory amount. (If an amount reduces the accountbalance then enter with a negative sign preceding the number , e.g. -15,000, or parenthesise.g. (15,000). Enter 0 if there is no effect.)$Ending inventory-as reported1. Included in the company’s count were goods with a cost of $303,000 that thecompany is holding on consignment. The goods belong to HarmonCorporation.2. The physical count did not include goods purchased by Schuda with a cost of$47,000 that were shipped FOB destination on December 28 and did notarrive at Schuda’s warehouse until January 3.3. Included in the inventory account was $18,000 of office supplies that werestored in the warehouse and were to be used by the company’s supervisorsand managers during the coming year.4. The company received an order on December 29 that was boxed and sittingon the loading dock awaiting pick-up on December 31. The shipper picked upthe goods on January 1 and delivered them on January 6. The shipping termswere FOB shipping point. The goods had a selling price of $41,500 and a costof $39,000. The goods were not included in the count because they weresitting on the dock.5. On December 29, Schuda shipped goods with a selling price of $84,000 and acost of $50,000 to Reza Sales Corporation FOB shipping point. The goodsarrived on January 3. Reza had only ordered goods with a selling price of$20,000 and a cost of $8,300. However, a sales manager at Schuda hadauthorized the shipment and said that if Reza wanted to ship the goods backnext week, it could.6. Included in the count was $47,000 of goods that were parts for a machinethat the company no longer made. Given the high-tech nature of Schuda’sproducts, it was unlikely that these obsolete parts had any other use.However, management would prefer to keep them on the books at cost,“since that is what we paid for them, after all.”$Correct inventoryQuestion Attempts: 0 of 3 usedhttp://edugen.wileyplus.com/edugen/shared/assignment/test/qprint.uni10/23/2015Exercise 6-2Page 2 of 2Copyright © 2000-2015 by John Wiley & Sons, Inc. or related companies. All rights reserved.http://edugen.wileyplus.com/edugen/shared/assignment/test/qprint.uni10/23/2015