Speaking of F4… anyway want to help out with JE from the simulations… I didn’t have advance accounting offered my senior year so this is a STRUGGLE to say the least.
lampy44
Participant
Simulation Becker F4 testlet 2 question 3:
Situation 2: Throughout the year, Peterson sold merchandise costing $30,000 to silver at a price of $50,000. SIlver sold 60% of the inventory by December 31. SIlver remitted payment to Peterson before year end.
Eliminating JE at December 31.
I initially had recorded for the original JE-
Peterson would record:
Cash 50,000
Inventory 30,000
Gain 20,000
SIlver:
Inventory 50,000
Cash 50,000
This doesn’t look correct based on the explanation of the answer.
Becker answer for elimination JE:
Sales 50,000 (okay here)
Inventory 8,000
COGS 42,000
Inventory: 40% of the goods sold by Peterson are still in ending inventory (ok) original cost of inventory on Peterson’s books was $12,000 (30,000 * 40%)
Reduction in inventory adjusts the $20,000 inventory on books of silver to correct amount of 12,000
I set up a T account and I’m on board still.
COGS= $42,000 entire amount of Petersons COGS eliminated. Could plug it but I dont understand why there isn’t an elimination for a gain on sale? What am I missing.
COGS 50,000 intercompany sales – 30,000 COGS = 20,000, so that another $12,000 needs to be eliminated to show COGS based on original cost to Peterson…