Question

Stallman Company took a physical inventory on December 31 and determined that goods costing $275,260 were on hand. Not included in the physical count were $31,540 of goods purchased from Pelzer Corporation, f.o.b. shipping point, and $28,940 of goods sold to Alvarez Company for $39,800, f.o.b. destination. Both the Pelzer purchase and the Alvarez sale were in transit at year-end. What amount should Stallman report as its December 31 inventory?

Answer 1

Answer:

Inventory at year-end: 344,000

Explanation:

The inventory should add the purchased goods from Pelzer as the possesion is transfer at shipping point.

The sales units to Alvarez should also be included as teh transfer is not complete yet. The term on this transaction are at destination.

Total inventory in transit: 28,940 + 39,800 = 68,740‬

on hand:   $   275,260

in-transit:  $     68, 740  

Total:         $  344,000