Summary Business Accounting

Question:

Reagan Corporation is a wholesale distributor of truck replacement parts. Initial amounts taken from

Reagan’s records are as follows:

Inventory at December 31 (based on a physical count of goods in Reagan’s warehouse on December 31)

$1,250,000

Accounts payable at December 31:




Additional Information:

1. Parts held by Reagan on consignment from Charlie, amounting to $155,000, were included in the

physical count of goods in Reagan’s warehouse and in accounts payable at December 31.

2. Parts totaling $22,000, which were purchased from Full and paid for in December, were sold in the last

week of the year and appropriately recorded as sales of $28,000. The parts were included in the physical

count of goods in Reagan’s warehouse on December 31 because the parts were on the loading dock

waiting to be picked up by customers.

3. Parts in transit on December 31 to customers, shipped f.o.b. shipping point on December 28, amounted

$34,000. The customers received the parts on January 6 of the following year. Sales of $40,000 to the

customers for the parts were recorded by Reagan on January 2.

4. Retailers were holding goods on consignment from Reagan, which had a cost of $210,000 and a retail

value of $250,000.