Question

CAT Machine Company maintains a general ledger account for each class of inventory, debiting such accounts for increases during the period and crediting them for decreases. The transactions below relate to the Raw Materials inventory account, which is debited for materials purchased and credited for materials requisitioned for use.

1.		An invoice for $17,820, terms f.o.b. destination, was received and entered January 2, 2017. The receiving report shows that the materials were received December 28, 2016.
2.		Materials costing $61,600, shipped f.o.b. destination, were not entered by December 31, 2016, “because they were in a railroad car on the company’s siding on that date and had not been unloaded.”
3.		Materials costing $16,060 were returned to the supplier on December 29, 2016, and were shipped f.o.b. shipping point. The return was entered on that date, even though the materials are not expected to reach the supplier’s place of business until January 6, 2017.
4.		An invoice for $16,500, terms f.o.b. shipping point, was received and entered December 30, 2016. The receiving report shows that the materials were received January 4, 2017, and the bill of lading shows that they were shipped January 2, 2017.
5.		Materials costing $43,560 were received December 30, 2016, but no entry was made for them because “they were ordered with a specified delivery of no earlier than January 10, 2017.”

Prepare correcting general journal entries required at December 31, 2016, assuming that the books have not been closed.

Answer 1

	particulars		debit	credit
1)	Inventory	Dr	17820
	Accounts Payable	Cr		17820
	( To record rectification of purchase)
2)	Inventory	Dr	16060
	Accounts Payable	Cr		16060
	( To record rectification of purchase)
3)	No entry required
4)	Accounts payable	Dr	16500
	Inventory	Cr		16500
	( To record reversal of purchase entry, as goods were shipped
	on January 2, 2004)
5)	Material Inventory	Dr	43560
	Accounts payable	Cr		43560
	( To record receipt of material)