Windsor Company took a physical inventory on December 31 and determined that goods costing $189,800 were...
Windsor Company took a physical inventory on December 31 and
determined that goods costing $189,800 were on hand. Not included
in the physical count were $26,130 of goods purchased from Pelzer
Corporation, f.o.b. shipping point, and $23,420 of goods sold to
Alvarez Company for $30,660, f.o.b. destination. Both the Pelzer
purchase and the Alvarez sale were in transit at year-end. What
amount should Windsor report as its December 31
inventory?
| December 31 inventory | $
|
Exercise 8-2
In your audit of Alan Company, you find that a physical
inventory on December 31, 2017, showed merchandise with a cost of
$449,390 was on hand at that date. You also discover the following
items were all excluded from the $449,390.
| 1. | Merchandise of $61,150 which is held by Alan on consignment. The consignor is the Max Suzuki Company. | |
| 2. | Merchandise costing $36,420 which was shipped by Alan f.o.b. destination to a customer on December 31, 2017. The customer was expected to receive the merchandise on January 6, 2018. | |
| 3. | Merchandise costing $47,720 which was shipped by Alan f.o.b. shipping point to a customer on December 29, 2017. The customer was scheduled to receive the merchandise on January 2, 2018. | |
| 4. | Merchandise costing $83,030 shipped by a vendor f.o.b. destination on December 30, 2017, and received by Alan on January 4, 2018. | |
| 5. | Merchandise costing $49,200 shipped by a vendor f.o.b. shipping point on December 31, 2017, and received by Alan on January 5, 2018. |
Based on the above information, calculate the amount that should
appear on Alan’s balance sheet at December 31, 2017, for
inventory.
| Inventory as on December 31, 2017 | $
|
Homework Answers
Answer to Question 1:
Inventory to be reported on December 31 = Inventory Physical Count + Inventory purchased on FOB Shipping Point + Inventory sold on FOB Destination
In FOB shipping Point, title of goods is transferred to purchaser at Shipping Point. Therefore, goods purchased from Pelzer Corporation is the inventory which belongs to Windsor Company.
In FOB Destination, title of goods is transferred to purchaser at Destination point. Therefore, Goods sold to Alvarez Company is still the inventory for Windsor Company.
Inventory to be reported on December 31 = $189,800 + $26,130 +
$23,420
Inventory to be reported on December 31 =
$239,350
Add Answer to:
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