Glenrosa Company bought inventory from Monterosa Company, FOB destination. On December 31, the last day of the accounting year,

Question

2 years ago

5

Glenrosa Company bought inventory from Monterosa Company, FOB destination. On December 31, the last day of the accounting year,

the goods were on a truck owned by Common Carrier, Inc., and not expected to arrive until January 2. Which company should include these goods in its December 31 inventory?
A. Common Carrier
B. Monterosa
C. Glenrosa
D. None of them should include these goods in inventory.

Business

1 answer:

il63 [147K] · Answer 1 · 2022-08-03T03:51:30+03:00

Answer:

The correct option is (B) Monterosa

Explanation:

At the time when the goods are shipped so in the case of FOB destination the goods title would be transferred to the buyer at the time of reaching to the buyer destination as mentioned by the buyer. Till then it would be included in the seller's inventory

So as per the given situation, Monterosa should involves this goods in its closing inventory i.e. as on December 31