Reference no: EM132643331

ABC Co. is having its inventory cut-off on December 31, 20x1. The following information is gathered for this purpose:

a) The inventory count sheet shows total inventory of $500,000 while the ledger shows a balance of $120,000 in accounts payable .

b) Not included in physical count is a shipment of inventory to a customer on December 30, 20x1 amounting to $60,000. The sale is FOB destination. The customer received the shipment on January 3, 20x2.

c) Included in the physical count and accounts payable is inventory costing $80,000 purchased from a supplier under FOB destination. This is indicated in the count sheet as "in-transit."

d) Not included in the count and in the records is a purchase of inventory costing $50,000 form a supplier on December 31, 20x1. the shipping term is FOB shipping point. The supplier shipped the goods on December 31,20x1. ABC Co. received the shipment on January 2, 20x2.

e) Not included in the count is inventory costing $30,000. Investigation shows that the inventory is ordered by a customer on December 31,20x1. The sale term is FOB shipping point. The inventory is shipped and the customer is billed on January 2, 20x2.

Requirement:

Problem 1: Compute for the Adjusted balances of inventory and accounts payable on December 31,20x1.