Question

Exercise 8-5 (Part Level Submission) Sandhill Company asks you to review its December 31, 2017, inventory values and prepare the necessary adjustments to the books. The following information is given to you 1. Sandhill uses the periadic method of recording inventory. A physical count reveals $352,335 of inventory on hand at December 31, 2017. 2. Not included in the physical count arrived in January. The invoice arrived and was recorded on December 31 inventory $20,130 of merchandise purchased on December 15 from Browser. This merchandise was shipped f.o.b. shipping point on December 29 and 3. Included in inventory is merchandise sold to Champy on December 30, f.o.b. destination. This merchandise was shipped after account for $19,200 on December 31. The merchandise cost $11,025, and Champy received it on January 3 was counted. The invoice was prepared and recorded as a sale on 4. Included in vntor ded chandise received from Dudley on December 31 with an invoice price of $23,445. The merchandise was shipped f.o.b. destination. The invoice, which has not yet 5. Not included in inventory is $12,810 of merchandise purchased from Glowser Industries. This merchandise was received on December 31 after the inventory had been counted. The invoice was received and recorded on December 30. 6. Included in inventory was $15,657 of inventory held by Sandhill on consignment from Jackel Industries. 7, Included in inventory $28,350 on December 31. The cost of this merchandise was $15,780, and Kemp received the merchandise on January 5 8. Excluded from inventory was a carton labeled "Please accept for credit." This carton contains merchandise costing $2,250 which had been sold to to the books to reflect the return, but none merchandise sold to Kemp f.o.b. shipping point. This merchandise was shipped on December 31 after was counted. The invoice was prepared and recorded as a sale for customer for $3,900. No entry had been made the returned merchandise seemed damaged; Sandhill will honor the return. (a) Your answer is correct. Determine the proper inventory balance for Sandhill Company at December 31, 2017, Inventory balance on December 31, 2017 356088 Prepare any correcting entries to adjust inventory to its proper amount at December 31, 2017. Assume the books have not been closed. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically Indented when amount is entered. Do not Indent manually.) (b) Credit Debit No. Account Titles and Explanation 1. 2. 3. 4. 5. 6. 6. 7. 8. Open Show Work Click if you would like to Show Work for this question:

Answer 1

Answer :

Calculation of inventory of Sandhill Company at December 31, 2017:

Inventory balance as on December 31,2017	$ 352,335
Adjustments for above transactions: Transaction 2	20,130
Transaction 3	0
Transaction 4	0
Transaction 5	12,810
Transaction 6	(15,657)
Transaction 7	(15,780)
Transaction 8	2,250
Adjusted Inventory balance on December 31, 2017	$ 356,088

b. Journal Entries-

S.No.	Accounts Titles and Explanations	Debit $	Credit $
1	No Entry
	No Entry
	(No entry required as beginning balance is given)
2	No Entry
	No Entry
	(No entry required but an adjustment to the inventory balance is made)
3	Sales	19,200
	Accounts Receivable		19,200
	(Being adjustment entry to record credit sales )
4	Inventory	23,445
	Accounts Payable		23,445
	(Being entry to adjust inventory purchased on account )
5	No Entry
	No Entry
	(No entry required )
6	No Entry
	No Entry
	(No Entry required )
7	No Entry
	No Entry
	(No Entry required )
8	Sales returns and Allowance	3,900
	Accounts Receivable		3,900
	(Being adjusting entry to record return of goods sold that is not included in Inventory balances )