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Inventory in transit

Ggreg13y ago
As per Jurate & Dovile of e.g 1 concerning goods in transit :
" Goods despatched by Jurate to Dovile before the yr end ( 31/12/2009) with the related invoices to the value of $10000 were not received by Dovile until 4 Jan 2010. Original cost of goods was $10,000."

Adjustments made :
+ $10,000 in S inventory
+ $10,000 in Trade payables for P


As per Boo e.g in BPP xam kit :
"On 31 December 2008, Boo (parent) despatched goods which cost $80,000 to Goose (sub), at an invoiced cost of $100,000 n Goose received the goods on 2 Jan 2009 n recorded transaction then."

Adjustments made to B/S:

+ $80,000 in Goose inventory
- $100,000 from receivables
- $20,000 pup from CREarnings

Why r the entries different from Jurate&Dovile (xcept pup part)?
MikeLittleMikeLittleTutor13y ago#1
The BPP answer has applied a short cut here I think.

To accelerate the goods into the records of Goose, the entry would be Dr Inventory on the Goose Balance Sheet $100,000 and Cr Accounts Payable ( Boo ) $100,000

That now allows us to cancel the Accounts Receivable against the Accounts Payable.

In addition, we now need to eliminate the pup so Increase Cost of Sales in Boo, Decrease Inventory by $20,000

I think that, if you put through those adjustments in your workings, you'll arrive at the same answer as BPP's
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