The basic criterion for including items in inventory is economic control rather than physical possession or legal ownership. In simple situations, all three transfer at the same time. Therefore, in many situations, physical transfer will determine when the seller records the sale and the buyer records the purchase of inventory in their accounting systems. However, because there may be differences in more complex situations, the economic substance of the transaction should always take precedence over its legal form to determine whether the buyer or the seller has economic control. When goods are in transit at the end of the accounting period, the shipping terms determine whether the seller or the buyer includes them in its inventory. If the goods are shipped FOB $($free$-$on$-$board$)$ shipping point, control of $($and legal title to$)$ the goods is transferred at the shipping point when the seller delivers them to the buyer, or to a transportation company that is acting as an agent for the buyer. Because the buyer has economic control at the shipping point, it will record a purchase of inventory and include those goods in its inventory. At the same time, the seller will record a sale and remove the goods from its inventory. If goods are shipped FOB destination, control of $($and legal title to$)$ the goods is not transferred until the goods are delivered to the buyer's destination. Because the seller has economic control until the goods are delivered, it does not record a sale and includes those goods in its inventory until the goods reach the buyer's destination. Similarly, the buyer will not record a purchThe basic criterion for including items in inventory is economic control rather than physical possession or legal ownership. In simple situations, all three transfer at the same time. Therefore, in many situations, physical transfer will determine when the seller records the sale and the buyer records the purchase of inventory in their accounting systems. However, because there may be differences in more complex situations, the economic substance of the transaction should always take precedence over its legal form to determine whether the buyer or the seller has economic control. When goods are in transit at the end of the accounting period, the shipping terms determine whether the seller or the buyer includes them in its inventory. If the goods are shipped FOB $($free$-$on$-$board$)$ shipping point, control of $($and legal title to$)$ the goods is transferred at the shipping point when the seller delivers them to the buyer, or to a transportation company that is acting as an agent for the buyer. Because the buyer has economic control at the shipping point, it will record a purchase of inventory and include those goods in its inventory. At the same time, the seller will record a sale and remove the goods from its inventory. If goods are sValuation of Inventory

Reddall Company has a fiscal year that ends on December $31.$ The inventory on hand at the end of the year is valued at a cost of $$94,000.$ The following items were not included in this inventory:

$1.$ Purchased goods in transit, under terms FOB shipping point, invoice price $$4,000,$ freight costs $$250.$

$2.$ Goods out on consignment to Marlman Company, sales price $$4,200,$ cost of goods $$3,000,$ shipping costs $$300.$

$3.$ Goods sold to Grina Co$.$ under terms FOB destination, invoiced for $$1,900($which included $$178$ freight charges to deliver the goods$)$ and have a cost of $$1,230.$ Goods are in transit.

$4.$ Goods held on consignment by Reddall at a sales price of $$2,700$ which included sales commission of $20\%$ of sales price.

$5.$ Purchased goods in transit, shipped FOB destination, invoice price $$2,100$ which included freight charges of $$190.$

Required:

Determine the cost of the ending inventory that Reddall should report on its December $31$ balance sheet.hipped FOB destination, control of $($and legal title to$)$ the goods is not transferr