Homework Answers
Note 1: E Company is accepting goods from R Company on consignment basis which means that E Company is a consignee and acting as an agent on behalf of R Company the consignor. When the goods are accepted on consignment basis the ownership lies with the consignor till the goods are sold.
Note 2: E Company is purchasing the goods from S Company. It's a simple business scenario where in E Company is the buyer and S Company is the seller.
Answer to A
R Company owns the goods in this scenario because the goods are accepted by E on Consignment from R. Goods on consignment means, in this scenario, E Company is the Consignee (Acting as an agent of R Company) and R Company is the Consignor (Owner). When goods are sent on consignment the ownership lies with the consignor until the goods are sold. Hence, the goods should be included in R Company's ending inventory.
Answer to B
S Company is the owner of the goods because the delivery terms is mentioned as FOB destination which means Free on Board till destination. The Ownership changes to E Company once the goods are delivered to the location specified by E Company. In this scenario as the goods are still in transit the ownership lies with S Company. Hence, the goods should be included in S Company's ending inventory.
Answer to C
R Company is the owner of the goods because the goods are accepted on consignment and the ownership lies with the consignor i.e., R Company till the goods are sold. Hence the goods should be included in R Company's ending inventory for the month.
Answer to D
E Company is the owner of the goods because the goods are already delivered and displayed at E Company's location. Hence, the goods should be included in E Company's ending inventory.
Answer to E
E Company is the owner of the goods even though the goods are still in transit because the delivery terms mentioned as FOB shipping point which means the ownership of the goods will be transferred from seller to buyer at the shipping point (seller's location). Hence, the goods should be included in E Company's ending inventory.
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Ending Inventory Costs
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Determine the total amount that should be included in Chen’s
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Ending Inventory Costs
Sandy Chen owns a small specialty store, named Chen's Chattel,
whose year-end is June 30. A physical inventory taken on June 30
reveals the following:
Determine the total amount that should be included in Chen’s
Chattel’s year-end inventory.
Cost of merchandise on the showroom floor and in the warehouse $38,400 Goods held on consignment (consignor is National Manufacturer) 6,400 Goods that Chen's Chattel, as the consignor, has for sale at the location of the Grand Avenue Vista...
Travis Company has just completed a physical Inventory count at year-end, December 31 of the current year. Only the items on the shelves, in storage, and in the receiving area were counted and costed on a FIFO basis. The inventory amounted to $65,700. During the audit, the independent CPA developed the following additional Information a Goods costing $870 were being used by a customer on a trial basis and were excluded from the inventory count at December 31 of the...
Travis Company has just completed a physical Inventory count at year-end, December 31 or the current year. Only the items on the shelves, in storage, and in the receiving area were counted and costed on a FIFO basis. The inventory amounted to 565,700. During the audit, the independent CPA developed the following additional Information: a. Goods costing $870 were being used by a customer on a trial basis and were excluded from the inventory count at December 31 of the...
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Travis Company has just completed a physical inventory count at year-end, December 31 of the current year. Only the items on the shelves, in storage, and in the receiving area were counted and costed on a FIFO basis. The inventory amounted to $67,000. During the audit, the independent CPA developed the following additional information: a. Goods costing $950 were being used by a customer on a trial basis and were excluded from the inventory count at December 31 of the...
On December 31 of the current year, Plunkett Company reported an ending inventory balance of $214,000. The following additional information is also available: • Plunkett sold and shipped goods costing $37,800 to Savannah Enterprises on December 28 with shipping terms of FOB shipping point. The goods were not included in the ending Inventory amount of $214,000. • Plunkett purchased goods costing $43,800 on December 29. The goods were shipped FOB destination and were received by Plunkett on January 2 of...
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