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Anstead Co. is experiencing a decrease in sales and operating income for the fiscal year ending October 31. Ryan Frazier, controller of Anstead Co., has suggested that all orders received before the end of the fiscal year be shipped by midnight, October 31, even if the Shipping Department must work overtime. Because Anstead Co. ships all merchandise FOB shipping point, it would record all such shipments as sales for the year ending October 31, thereby offsetting some of the decreases in sales and operating income. Discuss whether Ryan Frazier is behaving in a professional manner.
Financial And Managerial Accounting
Solutions
Financial And Managerial Accounting
Anstead Co. is experiencing a decrease in sales and operating income for the fiscal year ending October 31. Ryan Frazier, controller of Anstead Co., has suggested that all orders received before the end of the fiscal year be shipped by midnight, October 31, even if the Shipping Department must work overtime. Because Anstead Co. ships all merchandise FOB shipping point, it would record all such shipments as sales for the year ending October 31, thereby offsetting some of the decreases in sales and operating income.
Discuss whether Ryan Frazier is behaving in a professional manner.
Discuss whether Person RF is behaving in a professional manner.
Explanation of Solution
FOB shipping point: When the buyer bears the freight charges for the delivery of merchandise from the point of origin, it is referred to as FOB (freight-on-board) shipping point. So, the title of ownership is held with the buyer, from the shipping point itself.
In this case, it is identified that the shipments were made before midnight on October 31. Thus it should be recorded as the sales for the fiscal year ending October 31...
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