Question

Metlock Company took a physical inventory on December 31 and determined that goods costing $185,000 were on hand. Not included in the physical count were $24,080 of goods purchased from Pelzer Corporation, f.o.b. shipping point, and $20,810 of goods sold to Alvarez Company for $32,070, f.o.b. destination. Both the Pelzer purchase and the Alvarez sale were in transit at year-end. What amount should Metlock report as its December 31 inventory?

Answer 1

Answer:

$229,890

Explanation:

The formula to compute the ending inventory is shown below:

= Cost of inventory + goods purchased from f.o.b. shipping point + goods sold at f.o.b. destination

= $185,000 + $24,080 + $20,810

= $229,890

We added the goods purchased and goods sold to the cost of inventory so that the accurate value of the ending inventory can come.