Answered: Presented below is a list of items that…

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 12GI: Consider each of the following independent situations. Should a company report the goods in its...

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Presented below is a list of items that may or may not be reported as inventory in a company’s December 31 balance sheet.

1. Goods out on consignment at another company’s store- P800,000

2. Goods sold on installment basis- P100,000

3. Goods purchased F.O.B. shipping point that are in transit on December 31- P120,000

4. Goods purchased F.O.B. destination that are in transit on December 31- P200,000

5. Goods sold to another company, for which our company has signed an agreement to repurchase at a set price that covers all costs related to the inventory- P300,000

How much of these items would typically be reported as inventory in the financial statements?

A. 1,100,000

B. 1,220,000

C. 1,520,000

D. 800,000

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