Question

The company shipped merchandise valued at $100,000 F.O.B. destination on December 28, Year 3, and recorded the sale and relief of inventory on that date. The customer received the merchandise on January 4, Year 4. The merchandise has a profit margin of 20%. Record the necessary Year 3 adjustments, if any.

Answer 1

Answer:

The company must not make any adjustment entries in year x3 since the FOB means "Free on board" and at the moment the buyer delivers the goods at the port of shipment, at that time the risks of loss or damage of merchandise are transferred to the buyer from the seller

When this happens, the sale is made since the seller no longer owns the merchandise.

n this case, the seller does not own the merchandise since December 28 and has already made the corresponding records. so he should not make any adjustments.