Question

Ayayai Corp. is trying to determine the value of its ending inventory as of February 28, 2017, the company's year-end. The accountant counted everything that was in the warehouse, as of February 28, which resulted in an ending inventory valuation of $45,.620. However, she didn't know how to treat the following transactions so she didn't record them For each of the transactions below, specify whether the item in question should be included in ending inventory, and if so, at what amount. (f item is not included in the ending inventory, then enter 0for the amounts) (a) On February 26, Ayayai Corp. shipped to a customer goods costing $743. The goods were shipped FOB shipping point, and the recelving report indicates that the customer received the goods on March 2 $ (b) On February 26, Martine Inc. shipped goods to Ayayai Corp. FOB destination. The invoice price was $381 plus $25 for freight. The receiving report indicates that the goods were received by Ayayai Corp. on March 2 Ayayai Corp.had $520 of invéntory at a (c) customer's warehouse "on approval The customer was going to let Ayayal Corp. know whether it wanted the merchandise by the end of the week, March 4 $ (d) Ayayai Corp. also had $440 of inventory at a Belle craft shop, on consignment from Ayayai Corp.. On February 26, Ayayai Corp. ordered goods (e) costing $821. The goods were shipped FOB

Answer 1

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Solution: Particulars Action-Should Amount Not Included $ Because, as per FOB shipping term, ownership is transferred to buyer at shipping point. Not Included Included Included Included Included Included b) Because, as per FOB destination, ownership is transferred to buyer at receipt of goods - As the goods have not yet been shipped to customer. c) 520 d) As the legal right is with consignor. $ 440 e) f) Because, damaged goods has expected selling price Because, as per FOB shipping term, ownership is transferred to buyer at shipping point. 821 Because, as per FOB destination, ownership is transferred to buyer at receipt of goods 288 423