Tablet Direct is a direct marketer of computer hardware, software, peripherals,
ID: 2537000 • Letter: T
Question
Tablet Direct is a direct marketer of computer hardware, software, peripherals, and electronics. In a recent annual report, the company reported that its revenue is "recognized upon receipt of the product by the customer Required: 1. Indicate whether Tablet Direct's sales terms are FO8 shipping point or FOB destination. FOB destination O FOB shipping point Assume Tablet Direct sold inventory on account to eCOST.com on December 28 that was to be delivered January 3. The inventory cost Tablet Direct $29,500 and the selling price was $39,000. What amounts, if any, related to this transaction would be reported on Tablet Direct's balance sheet and income statement in December? (Select all that apply.) 2a. Balance sheet: $29,500 reported as inventory Income statement $39,000 reported as sales revenue and $29,500 reported as cost of goods sold. Income statement no amounts related to this transaction Balance sheet: $39,000 reported as accounts receivable (until collected) Balance sheet: $39,000 reported as accounts receivable Balance sheet: no amounts related to this transaction Balance sheet: $39,000 reported as accounts receivable (until collected), no inventory 2b. Assuming the same information from requirement 2a, what amounts, if any, related to this transaction would be reported on PC Mall's balance sheet and income statement in January? Select all that apply.) Balance sheet: $29,500 reported as inventory Income statement $39,000 reported as sales revenue and $29,500 reported as cost of goods sold. Income statement: no amounts related to this transaction Balance sheet: $39,000 reported as accounts receivable (until collected) Balance sheet: $39,000 reported as accounts receivable Balance sheet: no amounts related to this transaction Balance sheet: $39,000 reported as accounts receivable (until collected), no inventory 3. Assume Tablet Direct purchased electronics on December 29 that were shipped that day and received on January 2. For these goods to be included in Tablet Direct's inventory on December 31, would the terms have been under FOB destination or FOB shipping point? FOB shipping point FOB destinationExplanation / Answer
ERROR In 2 b only---- all other answers are perfect. 1. Tablet Direct sales terms are FOB Destination ie. Sale occurs (& revenue is recognised by the seller) only when goods arrive at the buyer's receiving point 2a… 1&3 Balance sheet: $ 29500 reported as inventory Income statement:No amounts related to this transaction 2b.. 3 & 6 Income statement: no amounts related to this transaction Balance sheet : no amounts related to this transaction 3.. FOB Shipping point ie. Sale occurs at the seller's shipping point --when goods are shipped . So, Tablet Direct includes the goods shipped on Dec.29 in his inventory balance as on Dec.31
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