question archive The Lewis Company's inventory at December 31, 2016, was $325,000 based on a physical count priced at cost, and before any necessary adjustment for the following: -Merchandise costing $30,000, shipped f
The Lewis Company's inventory at December 31, 2016, was $325,000 based on a physical count priced at cost, and before any necessary adjustment for the following: -Merchandise costing $30,000, shipped f
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The Lewis Company's inventory at December 31, 2016, was $325,000 based on a physical count priced at cost, and before any necessary adjustment for the following:
-Merchandise costing $30,000, shipped f.o.b. shipping point from a vendor on December 30, 2016, was received on January 5, 2017.
-Merchandise costing $22,000, shipped f.o.b. destination from a vendor on December 28, 2016, was received on January 3, 2017.
-Merchandise costing $38,000 was shipped to a customer f.o.b. destination on December 28, arrived at the customer's location on January 6, 2017.
-Merchandise costing $12,000 was being held on consignment by Taylor Company.
What amount should Lewis Company report as inventory in its December 31, 2016, balance sheet?
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The amount Lewis Company should report as inventory in its December 31, 2016, balance sheet is $405,000.
Explanation:
| Amount | |
|---|---|
| Unadjusted Inventory | $325,000 |
| Add: Fob Shipping point - buyer | 30,000 |
| Add: Fob Destination - seller | 38,000 |
| Add: Consigned Goods | 12,000 |
| Adjusted Inventory | $405,000 |
Notes:
- With Fob Shipping point, merchandise is considered the property of the buyer at the date it is shipped by the seller.
- With Fob Destination, merchandise is considered property of the buyer only when it arrives at the destination of the buyer. Merchandise is still considered property of the seller when it is still in transit.
- Consigned Goods are considered inventory of the consignor.
