E8-5 (Inventoriable Costs—Error Adjustments) Werth Company asks you to review its December 31, 2010, 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 273,647of inventory on hand at December 31, 2010.
2. Not included in the physical count of inventory is $ 12,139 of merchandise purchased on December 15 from Browser. This merchandise was shipped f.o.b. 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 merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale on
account for $ 14,912on December 31. The merchandise cost $ 8,563 and Bubbey received it on January 3.
4. Included in inventory was merchandise received from Dudley on December 31 with an invoice price of $ 18,209 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 $ 9,949 of merchandise purchased from Minsky 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 $12,160 of inventory held by Werth on consignment from Jackel Industries.
7. Included in inventory is merchandise sold to Sims f.o.b. shipping point. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale for $22,019 on December 31. The cost of this merchandise was $, 13,421and Sims received the merchandise on January 5.
8. Excluded from nventory was a carton labeled “Please accept for credit.” This carton contains merchandise costing $1,748 which had been sold to a customer for $ 3.029. No entry had been made to the books to reflect the return, but none of the returned merchandise seemed damaged.
(a) Determine the proper inventory balance for Werth Company at December 31, 2010.
(b) Prepare any correcting entries to adjust inventory to its proper amount at December 31, 2010. Assume the books have not been closed
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