Asked by Fatihah Masri on Jul 30, 2024
Verified
Hampton Co. took a physical count of its inventory on December 31. In addition, it had to decide whether or not the following items should be added to this count.(a)Inventory on hand had been sold earlier in the year but had been returned by customers for various warranty repairs.(b)Hampton Co. sent merchandise on a consignment basis on December 31 just prior to the physical count.(c)On December 22, Hampton Co. ordered merchandise on FOB destination terms. The merchandise was shipped by the supplier on December 30 but had not been received by December 31.(d)On December 27, Hampton Co. ordered merchandise on FOB shipping point terms. The merchandise was shipped on December 29 but had not been received by December 31.(e)Merchandise sold FOB shipping point on December 31 was picked up by the freight company just before closing on December 31.(f)Merchandise shipped to a customer FOB destination was picked up by the freight company on December 28 but had not arrived at its destination as of December 31.
Answer "yes" or "no" to indicate which items should and should not be added to the December 31 inventory count.
FOB Destination
A shipping term indicating that the seller bears the shipping costs and remains responsible for the goods until they are received and signed for by the purchaser.
FOB Shipping Point
A shipping term indicating that the buyer assumes responsibility for the goods and the shipping costs as soon as the goods leave the seller's premises.
Consignment
An arrangement in which goods are left with a third party to sell, but the ownership remains with the supplier until the goods are sold.
- Understand the treatment of consignment goods, goods in transit, and returns on inventory counts and financial reporting.
Verified Answer
ZK
Learning Objectives
- Understand the treatment of consignment goods, goods in transit, and returns on inventory counts and financial reporting.