question archive On December 31 2015 there were goods in transit to customers with terms FOB destination, amounting to $3,500 (expected delivery on January 4 2016)
On December 31 2015 there were goods in transit to customers with terms FOB destination, amounting to $3,500 (expected delivery on January 4 2016)
Subject:BusinessPrice:2.88 Bought3
On December 31 2015 there were goods in transit to customers with terms FOB destination, amounting to $3,500 (expected delivery on January 4 2016). Because the goods had been shipped, they were excluded from the physical inventory count.
Is this a, no effect, add to inventory, or do not include in inventory?
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Answer choice: Add to inventory
Explanation:
The shipping terms FOB destination means that title passes once the goods reach their destination which is the buyers place of business. Since the goods are in transit they should remain in the inventory of the seller until the goods are delivered. This needs to be added to the inventory account of the seller.
