CPAnet Forum: Questions

Active Topics

Memberlist

Help

FAR STUDY GROUP
CPAnet Forum : FAR STUDY GROUP

Topic: Questions - Inventory (

Topic Closed)

Author

Message

<< Prev Topic | Next Topic >>

rchxenson
Regular
Regular

Joined: 22 Feb 2009
Online Status: Offline
Posts: 151

Posted: 29 Mar 2009 at 16:36 \| IP Logged

so a becker example.....

The following items were included in Opal Co.'s inventory account at December 31, 1992:

Merchandise out on consignment, at sales price, including 40%

markup on selling price $40,000

Goods purchased, in transit, shipped F.O.B. shipping point 36,000

Goods held on consignment by Opal 27,000

By what amount should Opal's inventory account at December 31, 1992, be reduced?

I got the answer ebcause I chose the closest answer to my calculat ion but they are calcing the Gross Profit at

40000 * .40 = 16000

But that doesn't make sense since 24000*1.4 does not equal 40,000.

Am I calcing my gross profits wrong or something? I mean, do I always have to pick the closest answer to what I calculate?

Also, how do I get this line spacing off after a return? anyone?

rchxenson
Regular
Regular

Joined: 22 Feb 2009
Online Status: Offline
Posts: 151

Posted: 29 Mar 2009 at 17:20 \| IP Logged

meh, I think I am just calculating gross profit wrong, I am using the inventory cost as the base where I should be using the sales price as the base (as 40% of that price is Gross profit).

How could I have been doing it wrong this whole time....

On that note, anyone know how to stop skipping lines when I press return, it's really annoying me

divyagovil1
Major Contributor

Joined: 30 Jan 2009
Location: India
Online Status: Offline
Posts: 1456

Posted: 29 Mar 2009 at 19:19 \| IP Logged

if it's a long question or answer i have to type, i usually do it in the word document, copy and then paste it over here....

even, i would love to know how to skip lines if i m typing here....

Anyone???

__________________
Divya - CO State

Passed using Becker Review :
FAR - 04/11/09 - 94
BEC - 05/30/09 - 86
REG - 08/29/09 - 95
AUD - 11/21/09 - 92
Ethics - 2011

cpa2bsoon
Major Contributor

Joined: 25 Mar 2009
Location: United States
Online Status: Offline
Posts: 263

Posted: 09 May 2009 at 21:04 \| IP Logged

Becker: 00481

Ahm Corp. owns 90% of Bee Corp.'s common stock and 80% of Cee Corp.'s common stock. The remaining common shares of Bee and Cee are owned by their respective employees. Bee sells exclusively to Cee, Cee buys exclusively from Bee, and Cee sells exclusively to unrelated companies. Selected 1991 information for Bee and Cee follows:

Bee Corp. Cee Corp.

Sales $130,000 $91,000

Cost of sales & nbsp; 100,000 ; 65,000

Beginning inventory None None

Ending inventory None 65,000

What amount should be reported as gross profit in Bee and Cee's combined income statement for the year ended December 31, 1991?

The answer is $ 41000

Could someone please tell me what the journal entries would be. The solution provided by Becker just doesn't make sense to me!

__________________
Michelle/New Hampshire
BEC-80
REG-85
FAR-80
AUD-78

sanju06
Regular
Regular

Joined: 23 Sep 2008
Online Status: Offline
Posts: 181

Posted: 10 May 2009 at 13:18 \| IP Logged

I usually go by the following entry:

Dr.Sales-Bee corp. 130,000
Cr. Cost of Sales -Bee corp. 100,000
Cr. Cost of Sales-Cee corp. 15,000(30/130*65,000)
Cr. Inventory-Cee corp. 15,000(30/130*65,000)

We are eliminating the entire amount of Sales and cost of sales made by Bee(as everything is intercompany here). The corresponding profit is take away from Cee's cost of sales and Inventory.

So, total sales now will be 91,000
Less:Cost of Sales & nbsp; 50,000

Gross Profit 41,000

hope it clarifies your doubt!

<< Prev Page of 14 Next >>

Printable version

You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot delete your posts in this forum
You cannot edit your posts in this forum
You cannot create polls in this forum
You cannot vote in polls in this forum