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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

ENDING INVENTORY COSTS Danny Steele owns a small specialty store, named Steele’s Storeroom, whose year-end is June 30. Determine the total amount that should be included in Steele’s Storeroom’s year-end inventory. A physical inventory taken on June 30 reveals the following:

Cost of merchandise on the showroom floor and in the warehouse $42,600
Goods held on consignment (consignor is Quality Manufacturer) 7,600
Goods that Steele’s Storeroom, as the consignor, has for sale at the location of Midtown Galleria 8,300
Sales invoices indicate that merchandise was shipped on June 28, terms FOB shipping point, delivered at buyer’s receiving dock on July 6 4,350
Sales invoices indicate that merchandise was shipped on June 26, terms FOB destination, delivered at buyer’s receiving dock on July 1 2,800

To determine

Determine the total amount that should be included in year-end inventory.

Explanation

Inventory refers to the raw materials, work-in progress, and the finished goods products that are held by the business to sell or make it ready for sale in the future date.

FOB Shipping point means that the buyer pays all costs incurred for the delivery of goods once the goods is left from the supplier’s warehouse.

FOB Destination means that the buyer pays all costs incurred for the delivery of goods once the goods is delivered at buyer receiving point.

Goods in transit: Goods in transit can be described as the inventories which are shipped by the seller by using different mode of transportation but are yet to reach the buyer. The ownership of goods in transit depends on the legal title to the goods which further depends on the terms of the sale...

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