Umatilla Bank and Trust is considering giving Sheffield Corp. a loan. Before doing so, it decides that further discussions with Sheffield’s accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $273,850. Discussions with the accountant reveal the following.1. Sheffield shipped goods costing $53,860 to Hemlock Company FOB shipping point on December 28. The goods are not expected to reach Hemlock until January 12. The goods were not included in the physical inventory because they were not in the warehouse.2. The physical count of the inventory did not include goods costing $88,840 that were shipped to Sheffield FOB destination on December 27 and were still in transit at year-end.3. Sheffield received goods costing $26,690 on January 2. The goods were shipped FOB shipping point on December 26 by Yanice Co. The goods were not included in the physical count.4. Sheffield shipped goods costing $52,540 to Ehler of Canada FOB destination on December 30. The goods were received in Canada on January 8. They were not included in Sheffield physical inventory.5. Sheffield received goods costing $41,780 on January 2 that were shipped FOB destination on December 29. The shipment was a rush order that was supposed to arrive December 31. This purchase was included in the ending inventory of $273,850.Determine the correct inventory amount on December 31.The correct inventory amount on December 31 $Enter a dollar amount

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Asked Oct 8, 2019
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Umatilla Bank and Trust is considering giving Sheffield Corp. a loan. Before doing so, it decides that further discussions with Sheffield’s accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $273,850. Discussions with the accountant reveal the following.

1.   Sheffield shipped goods costing $53,860 to Hemlock Company FOB shipping point on December 28. The goods are not expected to reach Hemlock until January 12. The goods were not included in the physical inventory because they were not in the warehouse.
2.   The physical count of the inventory did not include goods costing $88,840 that were shipped to Sheffield FOB destination on December 27 and were still in transit at year-end.
3.   Sheffield received goods costing $26,690 on January 2. The goods were shipped FOB shipping point on December 26 by Yanice Co. The goods were not included in the physical count.
4.   Sheffield shipped goods costing $52,540 to Ehler of Canada FOB destination on December 30. The goods were received in Canada on January 8. They were not included in Sheffield physical inventory.
5.   Sheffield received goods costing $41,780 on January 2 that were shipped FOB destination on December 29. The shipment was a rush order that was supposed to arrive December 31. This purchase was included in the ending inventory of $273,850.



Determine the correct inventory amount on December 31.

The correct inventory amount on December 31
  $Enter a dollar amount
 
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Expert Answer

Step 1

Inventory:

Inventory refers to the goods and materials that are held by the business for the purpose of resale.

Step 2

Determine the correct inven...

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Inventory December 31 on Transaction Amount in $ Explanation Unadjusted inventory 273,850 Since ownership is already transferred to the buyer at shipping point, the goods must not be inchuded in the value of inventory Ownerhsip will transfer to sheffield once it has received the inventory. Since, th goods are not received by sheffield they must not be included in the inventory Since the ownership of goods is with Sheffield corporation, it should be inchuded in the inventory Hence, it is added The ownership is retained with sheffield, it is inchuded in the inventory. Hence it is added The ownership of the goods are not retained by the Sheffield it is excluded from the inventory 1 2 26,690 3 4 52,540 5 (41,780) Adjusted Inventory 311,300

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