Enable Edt WECTED VIEW Be creful Bles thom the Internet can contain viroses, Unl

Question

Enable Edt WECTED VIEW Be creful Bles thom the Internet can contain viroses, Unles you seed to edit t'esafer to stay in Protected View F.O.B. Destination. The goods were expected to arrive on Jsnuary 5, 2018. Because the Problem 4 Lowe Company has just completed a physical inventory count at year-end on December 31, 2017. Only the items on the shelves, in storage, and in the receiving area were counted and costed an the FIFO basis. The inventory amounted to 5100,000. During the audit, the independent CPA discovered the following additional information: goods were not on hand, they were excluded from the phyaical inventory (e)Lowe Company, the consignce, held goods on consignment for Shaw Company that cost 3,000. Because these good were on hand aa of December 31, 2017 they were incladed in the physical inventory 0 Lawe Com pany had placed goods that had cost $3,400 on consignment (a)There were goods in transit on December 31, 2017 from a supplier with terms F.O.B Destination costing $10,000. Because the goods had not arrived, they were excluded from the physical inventory at Johnson Company. Because the goods are not on hand, they were excladed freen the physical inventory. lustructions Analyze the information above for Lowe Company and calculate a ending inventory. Please show your work for partial credit and answer. b) Lowe Company received notice from a supplier that goods ordered earlier at a cost of $5,000 had been delivered to the trucking company, a common carrier on December 28, 2017The terms were F OB. shipping Point. Because the shipment had not arrived on Decem ber 31, 2017, it was excluded trom the phykical inventory corrected amount for the explain the basis for your (e)0n December 31, 2017, there were goods in transit to eustomers in the smount of $800, terms F.O.B. Shipping Pont. The expected delivery date was January 8, 2018, Because the goode had been ehipped, they were exeluded from the physical inventory (d)0n December 31, 2017, Lowe Company shipped $2,500 warth of goode to a customer e a

Explanation / Answer

Inventory Value before Correction Comments $ 100,000 a. Since the goods were shipped FOB Destination, correctly excluded, as property will pass only upon arrival. - b. Since the shipment was FOB Shipping Point, property has at the point the goods were delivered to the trucking company. Hence should be included. + 5,000 c. Because the shipment to customers was FOB Shipping Point, property has passed to customers at the point the goods were put in transit. Hence correctly excluded. - d. As the shipment was FOB Destination, property remains with Lowe Company till the goods reach their destination. Hence value should be included. + 2,500 e. Goods held on consignment should be included in the inventory of consignor, not consignee. Hence should be excluded. (3,000) f. Same reason as in ( e) + 3,400 Corrected Inventory Balance $ 107,900

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