Western Company normally makes the journal entry for a purchase of inventory and recognition of the payable on receipt o
Posted: Fri Jul 01, 2022 8:26 am
Western Company normally makes the journal entry for a purchaseof inventory and recognition of the payable on receipt of a vendorinvoice. On December 31 (year end) it receives an invoice for$1,000 from Far East Ltd. and records the purchase. However, theincoming shipment is actually still in transit (in mid Pacific) atyear end and the sales terms were FOB destination. Western takes aphysical count of inventory at the end of year as standardprocedure. Which of the following is/are true statements?
Multiple Choice
does not legally own the goods on December 31
All technical statements are correct
All represent incorrect statements
may catch the error when it compares the count to the records(the book to physical adjustment)
should reverse the purchase entry to correct the error
Multiple Choice
does not legally own the goods on December 31
All technical statements are correct
All represent incorrect statements
may catch the error when it compares the count to the records(the book to physical adjustment)
should reverse the purchase entry to correct the error