Lumen INC. is preparing its 2020 year-end financial statements. Prior to any adjustments, inventory is valued at P76,050, based on a physical count. The following information has been found relating to certain inventory transactions. 1. P3 ,500 shipments of goods to a customer on December 31, terms FOB destination, was not included in the year-end inventory. The goods cost P2,600 and were delivered to the customer on January 8, 2021. The sale was properly recorded in 2021. Which of the following statements is true? a. There is no effect on the 2020 ending inventory. b. The 2020 ending inventory is overstated. c. The 2020 ending inventory is understated.
Lumen INC. is preparing its 2020 year-end financial statements. Prior to any adjustments, inventory is valued at P76,050, based on a physical count. The following information has been found relating to certain inventory transactions. 1. P3 ,500 shipments of goods to a customer on December 31, terms FOB destination, was not included in the year-end inventory. The goods cost P2,600 and were delivered to the customer on January 8, 2021. The sale was properly recorded in 2021. Which of the following statements is true? a. There is no effect on the 2020 ending inventory. b. The 2020 ending inventory is overstated. c. The 2020 ending inventory is understated.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter7: Inventories: Cost Measurement And Flow Assumptions
Section: Chapter Questions
Problem 11P: Olson Company adopted the dollar-value LIFO method for inventory valuation at the beginning of 2015....
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Lumen INC. is preparing its 2020 year-end financial statements. Prior to any adjustments, inventory is valued at P76,050, based on a physical count. The following information has been found relating to certain inventory transactions.
1. P3 ,500 shipments of goods to a customer on December 31, terms FOB destination, was not included in the year-end inventory. The goods cost P2,600 and were delivered to the customer on January 8, 2021. The sale was properly recorded in 2021. Which of the following statements is true?
a. There is no effect on the 2020 ending inventory.
b. The 2020 ending inventory is overstated.
c. The 2020 ending inventory is understated.
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