Question

Barlow Company's Accounts Payable balance at December 31, 2008, was P1,800,000 before considering the following transactions: • Goods were in transit from a vendor to Barlow on December 31, 2008. The invoice price was P100,000, and the goods were shipped FOB shipping point on December 29, 2008. The goods were received on January 4, 2009. • Goods shipped to Barlow FOB shipping point on December 20, 2008, from a vendor were lost in transit. The invoice price was P50,000. On January 5, 2009, Barlow filed a P50,000 claim against the common carrier. In its December 31, 2008, balance sheet, Barlow should report Accounts Payable of a. P1,950,000. b. P1,900,000. c. P1,850,000. d. P1,800,000.

Answer 1

Answer: The answer is 1950000

Explanation:

✓ Goods in transit on December 31, 2008:

Goods amounting to 100000 will be added into purchases of the year-end because they have already been sold as risk and rewards have been transferred to the Barlow that is goods have been physically dispatched to the Barlow. Hence this will increase accounts payable by 100000.

✓Goods in transit lost:

These words will also be included in the purchases and accordingly in the accounts payable irrespective of the fact that these have been destroyed. These goods were dispatched to the Barlow and therefore risk and rewards also been transferred hence purchase is done from Barlow's perspective.

So:

Total accounts payables are as under

Opening balance: 180000

Goods in transit reached next year:100000

Goods in transit lost:50000

Total: 1950000