Goods in Transit and on Consignment The company counted its

Goods in Transit and on Consignment The company counted its ending inventory on December 31. None of the following items were included when the total amount of the company\'s ending inventory was computed: $15,000 in goods located in the company\'s warehouse that are on consignment from another company. $20,000 in goods that were sold by the company and shipped on December 30 and were in transit on December 31; the goods were received by the customer on January 2. Terms were FO8 destination · $30,000 in goods that were purchased by the company and shipped on December 30 and were in transit on December 31; the goods were received by the company on January 2. Terms were FOB shipping point. $40,000 in goods that were sold by the company and shipped on December 30 and were in transit on December 31; the goods were received by the customer on January 2. Terms were FOB shipping point. The company\'s reported inventory (before any corrections) was $200,000. What is the correct amount of the company\'s inventory on December 31?

Solution

Ending inventory (before correction) = $200000

less: $20000 of units sold FOB destination (can not consider until consignment received by buyer) = (20000)

Add: $30000 costing of goods purchased FOB shipping = 30000

Add: $40000 of goods sold FOB shipping = 40000

Ending inventory on 1 Dec, = $250000