Chapter 7 Homework

Goods out on consignment at another company’s store.- Inventory, Balance sheet

Goods sold on an installment basis (bad debts can be

reasonably estimated).- COGS, Income statement

Goods purchased f.0.b. shipping point that are in transit at

December 31.- Inventory Balance Sheet

Goods purchased f.0.b. destination that are in transit at

December 31.- Not reported

Goods sold to another company, for which our company has

signed an agreement to repurchase at a set price that covers

all costs related to the inventory.- Inventory, Balance sheet

Goods sold where large returns are predictable.- COGS, Income statement

Goods sold f.0.b. shipping point that are in transit at December

31 - COGS, Income statement

Freight charges on goods purchased. - Inventory, Balance sheet

Interest costs incurred for inventories that are routinely

manufactured.- Interest expense, Income statement

Costs incurred to advertise goods held for resale. - Advertising expense, Income statement

Materials on hand not yet placed into production by a

manufacturing firm. - Inventory, Balance sheet

Office supplies.- Office supplies, Balance sheet

Raw materials on which a manufacturing firm has started

production but which are not completely processed.- Inventory, Balance sheet

Factory supplies.- Inventory, Balance sheet

Goods held on consignment from another company.- Not reported

Costs identified with units completed by a manufacturing firm

but not yet sold.- Inventory, Balance sheet

Goods sold f.0.b. destination that are in transit at December- Inventory, Balance sheet

Short-term investments in stocks and bonds that will be resold

in the near future.- Short-term investment, balance sheet

A special machine, fabricated to order for a customer, was finished and specifically segregated in the back part of the shipping room on December 31, 2025. The customer was billed on that date and the machine excluded from inventory although it was shipped on January 4, 2026. - Include in annual audit

Merchandise costing $6,300 was received on January 3, 2026, and the related purchase invoice recorded January 5. The invoice showed the shipment was made on December 29, 2025, f.o.b. destination. - Do not include in annual audit

A packing case containing a product costing $7,650 was standing in the shipping room when the physical inventory was taken. It was not included in the inventory because it was marked “Hold for shipping instructions.” Your investigation revealed that the customer’s order was dated December 18, 2025, but that the case was shipped and the customer billed on January 10, 2026. The product was a stock item of your client. - Include in annual audit

Merchandise received on January 6, 2026, costing $1,530 was entered in the purchase journal on January 7, 2026. The invoice showed shipment was made f.0.b. supplier's warehouse on December 31,2025. Because it was not on hand at December 31, it was not included in inventory. - Include in annual audit

Merchandise costing $1,620 was received on December 28, 2025, and the invoice was not recorded. You located it in the hands of the purchasing agent; it was marked “on consignment.” - DO not include in annual audit