Question

At year-end, harris co. had shipped $12,500 of merchandise fob destination to harlow co. which company should include the $12,500 of merchandise in transit as part of its year-end inventory?

Answer 1

Answer:

The answer is Harris Co, who should include the $12,500 of the merchandise in transit as part of its year-end inventory.

Explanation:

For this question, we must first need to understand the FOB destination.

FOB destination:

• Selling term under which the ownership of goods sold and shipped remain with the seller - Harris Co.
• This is until the goods arrive at the buyer's destination
• Once the goods reached at buyer's receiving dock, the ownership is transferred to the buyer from the seller - In this case, buyer is Harlow Co

Further explanation:

In this case, Harris Co shipped $12,500 of merchandise FOB destination to Harlow Co. The ownership will remain with the company Harris Co (seller) that shipped the goods to Harlow Co (buyer), until they arrive at the buyer company Harlow Co's receiving dock.