Asked by Elena Franco on May 17, 2024
Verified
For each of the following, calculate the cost of inventory reported on the balance sheet.(a)The total inventory on hand at the end of the year as determined by taking a physical inventory is $62,000. Of the $62,000, $8,000 has been sold FOB destination and is awaiting pickup by the carrier.(b)The total inventory counted at the end of the year was $63,000. Excluded from the count were purchases of $6,000 in transit under FOB shipping point terms.(c)The total inventory counted at the end of the year was $75,000. Excluded from the count were purchases of $5,000 in transit under FOB destination terms.
FOB Shipping Point
A term indicating that the buyer assumes ownership and responsibility for goods at the seller's location, and pays for shipping costs.
FOB Destination
A shipping term indicating that the seller bears the cost and risk of transporting goods until they are delivered to the buyer's location.
Physical Inventory
The process of counting and verifying the actual stock in a business at a specific point in time.
- Calculate and report inventory costs correctly.
Verified Answer
Learning Objectives
- Calculate and report inventory costs correctly.
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