Intermediate Accounting 14th Edition

Published by Wiley
ISBN 10: 0470587237
ISBN 13: 978-0-47058-723-2

Chapter 2 - Conceptual Framework for Financial Reporting - Exercises - Page 75: E2-10e

Answer

This entry is inappropriate because the sale should have been recorded in 2013 rather than 2012.

Work Step by Step

The inventory was sold in 2013 and therefore shouldn’t have been recognized in 2012 regardless if the company was using the free-on-board destination or free-on-board shipping delivery. Moreover, a credit in inventory and debit to cost of goods sold should have also been made in 2013.
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