Accounting Inventories please help?

Premier Bank and Trust is considering giving Alou Company a loan. Before doing so, they decide that further discussions with Alou's accountant may be desirable. One area of particular concern is the inventory account, which has a year-end balance of $297,000. Discussions with the accountant reveal the following. Determine the correct inventory amount on December 31 by deciding which amounts should be included in ending inventory. If amount should not be included enter it as 0. If amount should be deducted enter it in (parenthesis).

Ending inventory-physical count $

1. Alou sold goods costing $38,000 to Comerica Company, FOB shipping point, on December 28. The goods are not expected to arrive at Comerica until January 12. The goods were not included in the physical inventory because they were not in the warehouse. $ ____________________________

Update:

2. The physical count of the inventory did not include goods costing $95,000 that were shipped to Alou FOB destination on December 27 and were still in transit at year-end. $

Update 2:

3. Alou received goods costing $17,000 on January 2. The goods were shipped FOB shipping point on December 26 by Galant Co. The goods were not included in the physical count. $ ____________

4. Alou sold goods costing $35,000 to Emerick Co., FOB destination, on December 30. The goods were received at Emerick on January 8. They were not included in Alou's physical inventory. $ _____________

Update 3:

5. Alou received goods costing $44,000 on January 2 that were shipped FOB destination on December 29.The shipment was a rush order that was supposed to arrive December 31. This purchase was included in the ending inventory of $297,000. $

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  • Sandy
    Lv 7
    1 decade ago
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    1. Alou sold goods costing $38,000 to Comerica Company, FOB shipping point, on December 28. The goods are not expected to arrive at Comerica until January 12. The goods were not included in the physical inventory because they were not in the warehouse. $0

    2. The physical count of the inventory did not include goods costing $95,000 that were shipped to Alou FOB destination on December 27 and were still in transit at year-end. $0

    3. Alou received goods costing $17,000 on January 2. The goods were shipped FOB shipping point on December 26 by Galant Co. The goods were not included in the physical count. $ 17,000

    4. Alou sold goods costing $35,000 to Emerick Co., FOB destination, on December 30. The goods were received at Emerick on January 8. They were not included in Alou's physical inventory. $35,000

    5. Alou received goods costing $44,000 on January 2 that were shipped FOB destination on December 29.The shipment was a rush order that was supposed to arrive December 31. This purchase was included in the ending inventory of $297,000. $(44,000)

    Accountants report a merchandiser’s and a manufacturer’s revenues when a sale is made. The term, FOB Shipping Point, indicates that the sale occurred at the shipping point—at the seller’s shipping dock. FOB Destination indicates that the sale will occur when it arrives at the destination—at the buyer’s receiving dock.

    Accountants also assume that the cost of transporting the goods corresponds to these terms. If the sale occurred at the shipping point (seller’s shipping dock), then the buyer should take responsibility for the cost of transporting the goods. (The buyer will record this cost as Freight-In or Transportation-In.) If the sale doesn’t occur until the goods reach the destination (terms are FOB Destination), then the seller should be responsible for transporting the goods until they reach the buyer’s unloading dock. (The seller will record the transportion cost as Freight-Out, Transportation-Out, or Delivery Expense.)

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