Logan Company Has Provided the Following Information

question 57

Essay

Logan Company has provided the following information:
1) Included in the physical count were inventory items billed to a customer FOB shipping point on December 31, 2016. The goods had a cost of $280 and had been billed at $400. The shipment was on Logan's loading dock waiting to be picked up by the trucking company.
2) Goods returned by customers and held pending inspection in the returned goods area on December 31, 2016, were not included in the physical count. On January 5, 2017, the goods costing $260 were inspected and returned to inventory. Credit memos totaling $380 were issued to the customers on the same date.
3) On January 3, 2017, a monthly freight bill in the amount of $170 was received. The bill specifically related to merchandise purchased in December 2016, 30% of which was still in inventory at December 31, 2016. The freight charges had not been recorded at December 31, 2016.
4) Goods were shipped out on consignment on December 15, 2016, and were recorded as a sale at the sales price of $550. The consignee has not yet sold these items. Goods are sold at a markup of 10% on cost. The goods were not included in inventory.
Required:
Logan's unadjusted balances on December 31, 2016, for Inventory, Accounts Payable, and Sales are provided in the three columns of the schedule below.
a. Complete the schedule to provide the correct adjusted balances at December 31, 2016.

b. Prepare the December 31, 2016, adjusting journal entry that Logan would prepare to record the freight charges described in item 3 above.

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Definitions:

Paid-in Capital

The amount of money that a company has received from shareholders in exchange for shares of stock.

Par Value

The nominal or face value of a bond, share of stock, or other financial instrument, as stated by the issuer.

Cash Dividend

A payment made by a corporation to its shareholders, usually as a distribution of profits.

Stockholders' Equity

Represents the residual interest in the assets of an entity after deducting liabilities, essentially the net worth attributable to shareholders.