Albacore Sailboats manufactures small sailing dinghies. In 2022, the company's accountant recorded the following costs into the inventory account:

The company had no work in process at the end of both 2021 and 2022. Finished goods at the end of 2021 amounted to 6,000 sailboats at $300/boat. Production was 50,000 sailboats and 4,000 boats remained in inventory at December 31, 2022. The company uses a periodic inventory system and the FIFO cost flow assumption.
Required:
a. Of the $15,098,000, how much should have been capitalized into inventories?
b. Compute the ending value of inventory and the cost of goods sold for 2022.
c. If the error in inventory costing had not been corrected as per part (a), by how much would inventory be overstated at the end of 2022?
d. Record the journal entry to correct the error in inventory costing.

Question

Albacore Sailboats manufactures small sailing dinghies. In 2022, the company's accountant recorded the following costs into the inventory account:

The company had no work in process at the end of both 2021 and 2022. Finished goods at the end of 2021 amounted to 6,000 sailboats at $300/boat. Production was 50,000 sailboats and 4,000 boats remained in inventory at December 31, 2022. The company uses a periodic inventory system and the FIFO cost flow assumption.
Required:
a. Of the $15,098,000, how much should have been capitalized into inventories?
b. Compute the ending value of inventory and the cost of goods sold for 2022.
c. If the error in inventory costing had not been corrected as per part (a), by how much would inventory be overstated at the end of 2022?
d. Record the journal entry to correct the error in inventory costing.

Quizplus · Accepted Answer

The Answer of Albacore Sailboats manufactures small sailing dinghies. In 2022, the company's accountant recorded the following costs into the inventory account:

The company had no work in process at the end of both 2021 and 2022. Finished goods at the end of 2021 amounted to 6,000 sailboats at $300/boat. Production was 50,000 sailboats and 4,000 boats remained in inventory at December 31, 2022. The company uses a periodic inventory system and the FIFO cost flow assumption.
Required:
a. Of the $15,098,000, how much should have been capitalized into inventories?
b. Compute the ending value of inventory and the cost of goods sold for 2022.
c. If the error in inventory costing had not been corrected as per part (a), by how much would inventory be overstated at the end of 2022?
d. Record the journal entry to correct the error in inventory costing.

Albacore Sailboats Manufactures Small Sailing Dinghies