Question

E8.13 (L04) (luventoriable Costs --Error Adjustments) Werth Company asks you to review its December 31, 2019, inventory values and prepare the necessary adjustments to the books. The following information is given to you. 1. Werth uses the periodic method of recording inventory. A physical count reveals $234,890 of inven- tory on hand at December 31, 2019. 2. Not included in the physical count of inventory is $10,420 of merchandise purchased on December 15 from Browser. This merchandise was shipped f.ob. shipping point on December 29 and arrived in January. The invoice arrived and was recorded on December 31. 3. Included in inventory is merchandise sold to Bubbey on December 30, f.o.b. destination. This mer chandise was shipped after it was counted. The invoice was prepared and recorded as a sale on account for $12,800 on December 31. The merchandise cost $7,350, and Bubbey received it on January 3. 4. Included in inventory was merchandise received from Dudley on December 31 with an invoice price of $15,630. The merchandise was shipped f.o.b. destination. The invoice, which has not yet arrived, has not been recorded. 5. Not included in inventory is $8,540 of merchandise purchased from Minsky Industries. This mer chandise was received on December 31 after the inventory had been counted. The invoice was received and recorded on December 30.

Answer 1

a.

1	Inventory Balance on hand	234,890
2	Add: Not included in physical inventory	10420
3	No adjustment
4	No adjustment
5	Add: Merchandise from Dudley	8540
6	Less: Inventory held by Werth	-10438
7	Less: Sold to Sims	-11520
8	Add: Excluding inventory	1500
	Correct inventory balance at December 31,2019	233,392

b.

S No	Account Titles	Debit	Credit
1	No entry
2	No entry
3	Sales	12800
	Accounts receivable		12800
4	Purchases	15630
	Accounts payable		15630
5	No entry
6	No entry
7	No entry
8	Sales returns and allowances	2600
	Accounts receivable		2600