Question

Nash's Trading Post, LLC took a physical inventory on December 31 and determined that goods costing $208,000 were on hand. Not included in the physical count were $30,000 of goods purchased from Swifty Corporation, FOB, shipping point, and $23,500 of goods sold to Marigold Corp. For $30,000, FOB destination. Both the Swifty purchase and the Marigold sale were in transit at year-end.

Answer 1

Answer:

$261,500

Step-by-step explanation:

What amount should Nash report as its December 31 inventory?

Item                                                             Amount

Goods on hand as per physical count    $208,000

(+) Goods purchased from Swifty             $30,000

Corporation FOB shipping point    

(+) Goods sold to Marigold Corp               $23,500

FOB destination (at cost value)

Ending inventory                                        $261,500

Notes:

1) In case of FOB shipping point, the ownership of goods is transferred to the buyer when the goods are shipped and hence in the case of purchases from Swifty corporation, the goods should be included in the inventory of Nash's Trading Post as the goods are shipped and are in transit.

2) In case of FOB destination, the ownership of goods is transferred to the buyer when the goods reaches to the buyer, hence in the case of sales made to Marigold Corp, the goods are still in transit and the ownership is not transferred to Marigold Corp, hence Nash's Trading Post should included that goods in its inventory.