Question

1. Included in the physical count were tools billed to a customer fo.b.shipping point on December 31, 2020. These tools had a cost of $32,200 and were billed at $41,200. The shipment was on Blossom's loading dock waiting to be picked up by the common carrier. 2. Goods were in transit from a vendor to Blossom on December 31, 2020. The invoice cost was $77,200, and the goods were shipped f.o.b. shipping point on December 29, 2020. 3. Work in process inventory costing $31,200 was sent to an outside processor for plating on December 30, 2020. 4. Tools returned by customers and held pending inspection in the returned goods area on December 31, 2020, were not included in the physical count. On January 8, 2021, the tools costing $33,200 were inspected and returned to inventory. Credit memos totaling $48,200 were issued to the customers on the same date. 5. Tools shipped to a customer f.o.b. destination on December 26, 2020, were in transit at December 31, 2020, and had a cost of $27,200. Upon notification of receipt by the customer on January 2, 2021, Blossom issued a sales invoice for $43,200. 6. Goods, with an invoice cost of $28,200, received from a vendor at 5:00 p.m. on December 31, 2020, were recorded on a receiving report dated January 2, 2021 The goods were not included in the physical count, but the invoice was included in accounts payable at December 31, 2020. 7. Goods received from a vendor on December 26, 2020, were included in the physical count. However, the related $57,200 vendor invoice was not included in accounts payable at December 31, 2020, because the accounts payable copy of the receiving report was lost. 8. On January 3, 2021, a monthly freight bill in the amount of $9,200 was received. The bill specifically related to merchandise purchased in December 2020, one- half of which was still in the inventory at December 31, 2020. The freight charges were not included in either the inventory or in accounts payable at December 31, 2020. (if an amount reduces the account balance then Prepare a schedule of adjustments as of December 31, 2020, to the initial amounts per enter either with a negative sign preceding the number, e.g. BLOSSOM COMPANY Schedule of Adjustments December 31, 2020 Inventory Accounts Payable $1,475,860 $1,270,300 Net Sales $8,115,600 Initial amounts Adjustments: a sit i No Total adjustments Adjusted amounts $

Answer 1

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	Inventory	Accounts Payable	Net Sales
Initial amounts	$   1,475,860	$                 1,270,300	$   8,115,600
Adjustments:
1	NONE	NONE	$       (41,200)
2	$         77,200	$                       77,200	NONE
3	$         31,200	NONE	NONE
4	$         33,200	NONE	$       (48,200)
5	$         27,200	NONE	NONE
6	$         28,200	NONE	NONE
7	NONE	$                       57,200	NONE
8	$            4,600	$                         9,200	NONE
Total adjustments	$       201,600	$                     143,600	$       (89,400)
Adjusted amounts	$   1,677,460	$                 1,413,900	$   8,026,200
1	The $32,200 of tools on the loading dock was properly included in the physical count.
	The sale should not be recorded until the goods are picked up by the common carrier. $41,200 billing price.
	Therefore, no adjustment is made to inventory, but sales must be reduced by the
2	The $77,200 of goods in transit from a vendor to Ianthe was shipped f.o.b. shipping point on 12/29/2020
	Title passes to the buyer as soon as goods are delivered to the common carrier when sold f.o.b. shipping point
	Therefore, these goods are properly includable in Ianthe’s inventory and accounts payable
3	The work in process inventory sent to an outside processor IsIanthe’s property and should be included in ending inventory
4	Since these items were retrurned, should be included in Inventory and reduced from sale
5	Tools shipped to a customer f.o.b. destination are still owned by Ianthe while in transit because title does not pass on these goods until they are received by the buyer.
	Therefore, $27,200 must be added to the inventory column
	No adjustment is necessary in the sales column because the sale was properly recorded in 2021 when the customer received the goods.
6	The goods received from a vendor at 5:00 p.m. on 12/31/20 should be included in the ending inventory, but were not included in the physical count.
	Therefore, $28,200 must be added to the inventory column. No adjustment is made to accounts payable, since the invoice was included in 12/31/20 accounts payable.
7	$57,200 must be added to accounts payable since the invoice was not included in the 12/31/20 accounts payable balance
8	Since one-half of the freight-in cost ($9,200) pertains to merchandise properly included in inventory as of 12/31/20, $4,600 should be added to the inventory column
	The full $9,200 must be added to accounts payable since the liability was not recorded