Problem #3: Calculate ending inventory value. Paws R Us has an ending inventory

Question

Problem #3: Calculate ending inventory value. Paws R Us has an ending inventory balance of $345,000. Below is information related to the inventory account. A. Paws R Us bought goods costing $125,000 on 12/27, terms FOB shipping point. The goods shipped on 12/2S B. Paws R Us is holding consigned goods worth $15,600 for Fish R Us. Even though the goods are in Paws R C. Paws R Us sold goods of $32,500 on 12/29, terms FOB destination. The goods were shipped on 12/31 and Determine the correct ending inventory amount as of 12/31. and arrived to Paws R Us warehouse on 1/3. Since the goods were not at the warehouse on 12/31, they were not included in the ending inventory amount. Us warehouse, they are not included in ending inventory. arrived to the customer on 1/4·The goods were not included in ending inventory since they were not in the warehouse. s were S and arrived to the customer on 1/3. The goods were not included in ending inventory since they were not i the warehouse E. Paws R Us paid $54,000 in cash for goods on 12/26, terms FOB destination. The goods were shipped on 12/28 and arrived to Paws R Us warehouse on 1/2. Since the goods were paid for on 12/26, they were included in ending inventory. F. Pet Planet is holding consigned goods for Paws R Us as of 12/31. The goods have a value of $25,500. Th goods were not included in ending Inventory of Paws R Us. Problem #4: Lower-of-cost-or-market (LCM) Calculate inventory for Sammy's Sunglass Shop by applying LCM. Write answers on the HW sheet to turn SunglassesUnitsUnit Cost 25 21 17 Model 1 Model 2 Model 3 S35 $28 $39 Market $30 $32 $45

Explanation / Answer

Problem # 3:

Correct Ending Inventory Balance of Paws R Us as on 12/31 is $ 474,000.

Problem # 4:

Ending inventory balancde using LCM : $ 2,001.

Amount Justification Ending Inventory $ 345,000 A. + 125,000 Contract FOB Shipping Point. Title passed to the buyer as soon as the goods were put in transit. B. ----- Correctly excluded from ending inventory, as goods held on consignment belong to the consignor. C. + 32,500 Contract FOB Destination, therefore, title did not pass to the buyer till 1/4. Title and property belonged to the seller till such date. D. ---------- Correctly excluded from ending inventory, as title and ownership both passed to the buyer on 12/31 as the shipment was FOB Shipping Point E. - 54,000 Incorrectly included in ending inventory. FOB Destination, hence title and ownership did not pass before 1/2 F. + 25,500 Goods sent on consignment to be included in the inventory of consignor Corrected Ending Inventory $ 474,000

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