The December 31, 2016, year-end inventory balance of the Raymond Corporation is
ID: 2711588 • Letter: T
Question
The December 31, 2016, year-end inventory balance of the Raymond Corporation is $224,000. You have been asked to review the following transactions to determine if they have been correctly recorded.
Goods shipped to Raymond f.o.b. destination on December 26, 2016, were received on January 2, 2017. The invoice cost of $37,000 is included in the preliminary inventory balance.
At year-end, Raymond held $21,000 of merchandise on consignment from the Harrison Company. This merchandise is included in the preliminary inventory balance.
On December 29, merchandise costing $6,700 was shipped to a customer f.o.b. shipping point and arrived at the customer’s location on January 3, 2017. The merchandise is not included in the preliminary inventory balance.
At year-end, Raymond had merchandise costing $22,000 on consignment with the Joclyn Corporation. The merchandise is not included in the preliminary inventory balance.
Determine the correct inventory amount to be reported in Raymond’s 2016 balance sheet.
The December 31, 2016, year-end inventory balance of the Raymond Corporation is $224,000. You have been asked to review the following transactions to determine if they have been correctly recorded.
Explanation / Answer
#1. It shall NOT be included in his inventory because it's fob destination. He is the buyer and he didn't get it yet. Since he include it, it should be deducted. 224-37= 187 #2. It shall NOT be included because it's consignment. It is owned by the consignor. He include this in his inventory but it should NOT be. So we have to it deduct it 187-21=166 #3. Fob shipping point meaning he can record the sale as soon as the products is in transit even though the buyer is not in possession of the product yet. It should NOT be included in his inventory and he didn't so NO adjustments necessary. #4. It's consignment but he is the consignor. It should BE included in his inventory. Since he didn't include this. I should add this to his inventory. So 166+22= 188 So the ending inventory will be $188,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.