Question: A company just completed a physical inventory count at year end

A company just completed a physical inventory count at year-end, December 31. Items were counted and costed on a FIFO basis.
The inventory amounted to $40,000. The following information was not included in the inventory amount.
(a) Goods costing $600 were being used by a customer on a trial basis.
(b) A customer purchased goods for cash amounting to $2,650, but the amounts were not delivered until the next year. The cost of the goods for the company were $1,300, and that amount was included in the physical inventory count.
(c) Goods that have not arrived by December 31 from a supplier amounted to $4,550 with the terms FOB shipping point.
(d) The company shipped $600 worth of goods to a customer, FOB destination. The goods are expected to arrive in January of the next year

Begin with the $40,000 inventory amount and adjust the ending inventory using the additional items. Assume that the company’s accounting policy requires including in inventory all goods for which it has title (ownership). Use the fact that the change in title (ownership) is determined by the shipping.

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  • CreatedAugust 26, 2013
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