Based on the year-end count of inventory, Teachers’ Warehouse determined the tot

Question

Based on the year-end count of inventory, Teachers’ Warehouse determined the total merchandise on hand to be $62,000 as of December 31, 2013. The following information relating to the inventory is also available:  

Of the $62,000, $8,000 has been sold FOB destination and is awaiting pickup by the freight company.

Not included in the $62,000 count were Purchases of $6,000 in transit to Teachers' Warehouse; the merchandise is being shipped FOB shipping point.

Not included in the $62,000 count were Purchases of $5,000 in transit to Teachers’ Warehouse; this merchandise is being shipped FOB destination.                                             

The amount of inventory that Teachers’ Warehouse should report as of December 31, 2013 is

$65,000.

$68,000.

$73,000.

$76,000.

none of the above

a.

$65,000.

b.

$68,000.

c.

$73,000.

d.

$76,000.

e.

none of the above

Explanation / Answer

Solution:

Inventory Value as per books 62,000 Less: Sold -8,000 Add: Inventory waiting at warehouse 6,000 Add: Inventory waiting at warehouse 5,000 Amount of Inventory on December 31, 2013 65,000 The answer to the above question is a. $ 65,000

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