Rosner Company's business year ends on December 31

Rosner Company's business year ends on December 31. Listed below are purchase transactions which occurred during the last few days of 2004 or during the first few days of 2005. The inventory, determined by physical count, was taken after the close of business on December 31, 2004. The only adjusting entry recorded to date has been to enter the December 31 physical inventory on the books based on the physical count.

Instructions
1. On the accompanying chart, indicate the effect of each of these transactions on the ending inventory and on reported net income for 2004, by writing the words overstated, understated, or no effect in the appropriate column. Both columns must be answered for each transaction. An invoice for $8,000, terms f.o.b. shipping point, was received and entered December 30. The invoice shows that the merchandise was shipped December 29, and the receiving report indicates the merchandise was received January 2. An invoice for $300, terms f.o.b. shipping point, was received and entered December 30. The invoice shows that merchandise was shipped December 29, and the receiving report shows the merchandise was received December 31. An invoice for $3,000, terms f.o.b. shipping point, was received and entered January 2. The invoice shows the merchandise was shipped December 30, and the receiving report indicates the merchandise was received December 31. An invoice for $500, terms f.o.b. destination, was received and entered December 30. The receiving report shows the merchandise was received January 2. An invoice for $500, terms f.o.b. destination, was received and entered December 29. The receiving report indicates that the merchandise was received December 31. An invoice for $1,500, terms f.o.b. destination, was received and entered January 2. The receiving report indicates the merchandise was received December 31. Merchandise costing $12,000 and with a selling price of $18,000 was on consignment to Maris Distributing Company and was on that company's premises on December 31. No entry has been made for the consignment.
2. Prepare all necessary correcting entries for 2004. 3. Indicate which of the correcting entries must be reversed in 2005 by preparing the necessary reversing entries.


Click here for the solution: Rosner Company's business year ends on December 31

ACC 225 P07-05A You have just taken over the accounting for Choi Enterprises, whose annual accounting period ends December 31

ACC 225 P07-05A

You have just taken over the accounting for Choi Enterprises, whose annual accounting period ends December 31. The company’s previous accountant journalized its transactions through December 15 and posted all items that required posting as individual amounts (see the journals and ledgers in the Working Papers). The company’s transactions beginning on December 16 follow (terms for all its credit sales are 2/10, n/30):

Dec. 16 Sold merchandise on credit to Hanna Seppa, Invoice No. 916, for $7,700 (cost is $4,600).
17 Received a $1,040 credit memorandum from Funk Company for the return of merchandise received on December 15.

AND SO ON

31 Issued Check No. 626 to Jamie Inman, the company’s only sales employee, in payment of her $2,020 salary for the last half of December.
31 Issued Check No. 627 to Access Electric Company in payment of its $710 December electric bill.
31 Cash sales for the last half of the month are $29,600 (cost is $11,200). (Cash sales are recorded daily but are recorded only twice in this problem to reduce repetitive entries.)

Required
1. Record these transactions in the journals provided in the working papers.
2. Verify that amounts that should be posted as individual amounts to the general ledger accounts have been posted, including posting to the customer and creditor accounts. (Such items are immediately posted.) Foot and crossfoot the journals and make the month-end postings.
3. Prepare a December 31 trial balance and prove the accuracy of the subsidiary ledgers by preparing schedules of both accounts receivable and accounts payable.


Click here for the solution: ACC 225 P07-05A You have just taken over the accounting for Choi Enterprises, whose annual accounting period ends December 31