Anonymous
Anonymous asked in Business & FinanceOther - Business & Finance · 5 years ago

5th  Third  Street  Bank  is  considering  giving  Fallen  Company  a  loan. Before doing so, it decides that further discussion with fallen?

accountant may be desirable.One area of particular concern is the inventory account, which has a year‐end balance of $375,000.

Discussions with the accountant reveal the following.

1. Fallen sold goods costing $55,000 to White Company FOB shipping point on

December 28. The good

s are not expected to reach White until January 12. The

goods were not included in the physical inventory because they were not in the

warehouse.

2. The physical count of the inventory did not include goods co

sting $95,000 that

were shipped to Fallen FOB destination on December 27 and were still in transit

at year end.

3. Fallen received goods costing $15,000 on January 2. The goods were shipped

FOB shipping point on December 26 by Lynch Co. The goods were not included in

the physical count.

4. Fallen sold good

s costing $51,000 to Benet of Canada FOB destination on

December 30. The goods were received in Canada on January 8. They were not

included in Fallen physical inventory.

5. Fallen received goods costing $32,000 on January 2 that were shipped FOB

destination on Decemb

er 29. The shipment was a rush order that was supposed

to arrive December 31. This purchase was included in the ending inventory of

$375,000.

Instructions

Determine the correct inventory amount on December 31.

3 Answers

Relevance
  • 5 years ago
    Favorite Answer

    1. The $55k is not included

    2. Don't include the $95k

    3. Include the $15k

    4. Include the $51k

    5. Don't include the $32k

    Starting with the ending inventory of $375k, add $15k ($390k), add $51k ($441k), subtract $32k ($409k).

    I believe that's right. It's been a while since I've done this kind of accounting, but things have an affect on inventory based on when a sale happens. If it's FOB shipping point, the sale happens when it's shipped. If it's FOB destination, it happens upon delivery. If a sale happens on or before Dec 31, it's accounted for in the year end inventory.

  • Anonymous
    5 years ago

    Are you looking for a good loan lender and a honest company who can help you out, contact Ericson Finance via email:finance.ericson@hotmail.com

    • Login to reply the answers
  • 5 years ago

    can anyone help me to find this? sorry I dont have clue about it... thank you

    • Login to reply the answers
Still have questions? Get your answers by asking now.