Holiday, Inc.’s inventory of $887,000 at December 31, 2017, was based on a physi

Question

Holiday, Inc.’s inventory of $887,000 at December 31, 2017, was based on a physical count of goods priced at cost. The total does not include any adjustments for the following items.

What inventory amount should appear on Holiday’s December 31, 2017 balance sheet?

Inventory to be reported: $

(a) Goods shipped from a vendor f.o.b. destination on December 24, 2017, at an invoice cost of $12,000 to Holiday were received on January 4, 2018. These goods were excluded from the physical count. (b) The physical count excluded goods held by a retailer (Deals Corp.) on consignment for Holiday, Inc. The cost of these goods to Holiday was $32,000. Holiday did not record a sale when it shipped the goods to Deals. (c) The inventory included $48,000 of goods that were in Holiday’s warehouse on the morning of December 31, 2017 but were shipped to a customer f.o.b. shipping point later that day, after they had been included in the physical inventory count.

Explanation / Answer

Unadjusted inventory at December 31, 2017 887000 1 0 2 32000 3 -48000 Inventory to be reported 871000

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