PC Mall, Inc., is a direct marketer of computer hardware, software, peripherals, and electronics. In a recent annual report, the company reported that its revenue is “recognized upon receipt of the product by the customer.”
1. Indicate whether PC Mall’s sales terms are FOB shipping point or FOB destination.
2. Assume PC Mall sold inventory on account to eCOST. com on December 28 that was to be delivered January 3. The inventory cost PC Mall $ 25,000 and the selling price was $ 30,000. What amounts, if any, related to this transaction would be reported on PC Mall’s balance sheet and income statement in December? In January?
3. Assume PC Mall purchased electronics on December 29 that were shipped that day and received on January 2. For these goods to be included in PC Mall’s inventory on December 31, would the terms have been FOB destination or FOB shipping point?