Question

On December 31, 2023, Jen & Mink Clothing (J&M) performed the inventory count and determined the year-end ending inventory value to be $76000. It is now January 8, 2024, and you have been asked to double-check the year-end inventory listing. J&M uses a perpetual inventory system. Note: Only relevant items are shown on the inventory listing. Jen & Mink Clothing Inventory Listing December 31, 2023 # Inventory Number Inventory Description Quantity (units) Unit Cost ($) Total Value ($) 1 7649 Blue jackets 101 21 2,121 2 10824 Black pants 302 16 4,832 ... ... Total Inventory $ 76,000 The following situations have been brought to your attention: On January 3, 2024, J&M received a shipment of 101 blue jackets, for $2,121 (Item #7649). The inventory was purchased December 23, 2023, FOB destination from Global Threads. This inventory was included in J&M’s inventory count and inventory listing. On December 29, 2023, J&M sold scarves (Item #5566) to a customer with a sale price of $710 and cost of $505, FOB shipping. The order was shipped on December 30, 2023. J&M has not included this inventory. Red Blazers (Item #6193) were purchased and shipped from International Co. on December

Answer 1

The student needs to adjust the year-end inventory listing for Jen & Mink Clothing to exclude the items that were received after year-end and those that were sold and shipped prior to year-end, in compliance with a perpetual inventory system.

Step-by-step explanation:

The student is dealing with an inventory accounting problem where they need to ensure the accuracy of the year-end inventory value. As per the description, there are a couple of situations that need to be addressed:

• Received shipment of 101 blue jackets (Item #7649) should not be included in the year-end inventory if the terms were FOB destination and they arrived after the year-end date.
• Scarves sold with a sale price of $710 and cost of $505 (Item #5566), shipped on December 30, 2023, using FOB shipping, should be excluded from the year-end inventory as they were no longer in the possession of J&M at year-end.

These adjustments are required when using a perpetual inventory system to ensure that year-end inventory values are accurately reflected in the financial statements.