Final answer:
The correct adjusting journal entry for receiving goods worth $8,100 on December 28, 2016, but invoiced on January 2, 2017, is to debit Inventory and credit Accounts Payable for $8,100, ensuring that the expense is recorded in the 2016 financial statements.
Step-by-step explanation:
The question poses a scenario commonly encountered in financial accounting, where expenses or revenues must be recorded in the correct accounting period. The scenario provided deals with an invoice for goods received by the company in December, but invoiced in January. According to the matching principle in accounting, expenses should be matched with the revenues they help to generate in the same period, or recognized when they are incurred. The invoice received on January 2, 2017, is for goods received on December 28, 2016. Therefore, the expense must be recorded in December to properly reflect the transaction in the 2016 financial statements.
Correct Journal Entry
To correct this, the following adjusting journal entry is needed as of December 31, 2016:
- Debit Inventory $8,100
- Credit Accounts Payable $8,100
This journal entry increases the inventory to show that the goods are now assets of the company and acknowledges a liability (Accounts Payable) for the amount owed to the supplier. The terms f.o.b. destination indicate that ownership of the goods transfers on delivery, which was December 28, 2016, making the adjustment necessary in the 2016 accounting period.