Question

At December 31, Moore Company's inventory records indicated a balance of $360,000. Upon further investigation it was determined that this amount included the following:

1) $56,000 in inventory purchase made by Moore shipped from the seller December 28 terms FOB shipping point, but not due to be received until January 2.

2) $24,000 in inventiry purchases made by Moore shipped from the seller December 28 terms FOB destination, but not due to be received until January 3.

3) $8,000 in goods sold by Moore with terms FOB destination on December 28. The goods are not expected to reach their destination until January 4

4) $9,000 in goods sold by Moore with terms FOB shipping point on December 28. The goods are not expected to reach their destination until January 5.

5) $13,0000 of goods received on consignment from Dollywood company\

What is Moore's correct ending inventory balance at December 31?

Answer 1

Balance as per Inventory records= 360000

Less:  inventory purchases made by Moore shipped from the seller December 28 terms FOB destination, but not due to be received until January 3= (24000)

Less: goods sold by Moore with terms FOB shipping point on December 28. The goods are not expected to reach their destination until January 5= (9000)

Less: goods received on consignment from Dollywood company = (130000)

Moore's correct ending inventory balance= 360000-24000-9000-130000=197000

Notes: In case of FOB SHIPPING POINT, title of goods is transferred at the moment of shipping of goods ,

In case of FOB DESTINATION, title of goods is transferred at the time it is received by purchaser(reaches the destination).

Goods on consignment are included in the inventory of consignor and not consignee.