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Basil took a physical count of inventory at the end of the year and determined that...

Basil took a physical count of inventory at the end of the year and determined that $780,000 of goods were on hand. In addition, and not included in the $780,000 there were $60,000 of goods that were in transit and were shipped FOB shipping point and were actually received two days after the physical count. How much is ending inventory?

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Answer #1

Physical inventory at the end of the year = $780,000

Inventory of $60,000 ( FOB shipping point) were in transit at end of the year.

Inventory with FOB shipping point will be included in the ending inventory since in case of FOB shipping point, ownership of the inventory passes to the buyer when goods are shipped. Hence, although physical delivery of goods of $60,000 has not been received at the end of the year, still it will be included in ending inventory.

Ending inventory = 780,000+60,000

= $840,000

Kindly comment if you need further assistance.

Thanks‼!

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