Presented below is a list of items that may or may not be re

Presented below is a list of items that may or may not be reported as inventory in a company\'s Dec 31 balance sheet.

Indicate which of these items would typically be reported as inventory in the financial statements. If an item should not be reported as inventory, indicate how it should be reported in the financial statements.

1) Goods out on consignment at another company\'s store.

2) Goods sold on an installment basis (bad debts can be reasonably estimated).

3) Goods purchased f.o.b. shipping point that are in transit at Dec 31.

4) Goods purchased f.o.b. destination that are in transit at Dec 31.

5) Goods sold to another company, for which our company has signed an agreement to repurchase at a set price that covers all costs related to the inventory.

6) Goods sold where large returns are predictable.

7) Goods sold f.o.b. shipping point that are in transit at Dec 31.

8) Freight charges on goods purchased.

9) Interest costs incurred for inventories that are routinely manufactured.

10) Costs incurred to advertise goods held for sale.

11) Materials on hand not yet placed into production by a manufacturing firm.

12) Office supplies.

13) Raw materials on which a manufacturing firm has started production but which are not completely processed.

14) Factory supplies.

15) Goods held on consignmnet from another company.

16) Costs identified with units completed by a manufacturing firm but not yet sold.

17) Goods sold f.o.b. destination that are in transit at Dec 31.

18) Short-term investments in stocks and bonds that will be resold in the near future.

Solution

1.

Goods out on consignment at another company’s store.

Inventory

Balance Sheet

2.

Goods sold on an installment basis (bad debts can be reasonably estimated).

Cost of Goods Sold

Income Statement

3.

Goods purchased f.o.b. shipping point that are in transit at December 31.

Inventory

Balance Sheet

4.

Goods purchased f.o.b. destination that are in transit at December 31.

Not Reported

Not Reported

5.

Goods sold to another company, for which our company has signed an agreement to repurchase at a set price that covers all costs related to the inventory.

Inventory

Balance Sheet

6.

Goods sold where large returns are predictable.

Cost of Goods Sold

Income Statement

7.

Goods sold f.o.b. shipping point that are in transit at December 31.

Cost of Goods Sold

Income Statement

8.

Freight charges on goods purchased.

Inventory

Balance Sheet

9.

Interest costs incurred for inventories that are routinely manufactured.

Interest Expense

Income Statement

10.

Costs incurred to advertise goods held for resale.

Advertising Expense

Income Statement

11.

Materials on hand not yet placed into production by a manufacturing firm.

Inventory

Balance Sheet

12.

Office supplies.

Office Supplies

Balance Sheet

13.

Raw materials on which a manufacturing firm has started production but which are not completely processed.

Inventory

Balance Sheet

14.

Factory supplies.

Inventory

Balance Sheet

15.

Goods held on consignment from another company.

Not Reported

Not Reported

16.

Costs identified with units completed by a manufacturing firm but not yet sold.

Inventory

Balance Sheet

17.

Goods sold f.o.b. destination that are in transit at December 31.

Inventory

Balance Sheet

18) Short-term investments in stocks and bonds that will be resold in the near future. Answer is

Short-term Investments

Balance Sheet

1.		Goods out on consignment at another company’s store.		Inventory		Balance Sheet
2.		Goods sold on an installment basis (bad debts can be reasonably estimated).		Cost of Goods Sold		Income Statement
3.		Goods purchased f.o.b. shipping point that are in transit at December 31.		Inventory		Balance Sheet
4.		Goods purchased f.o.b. destination that are in transit at December 31.		Not Reported		Not Reported
5.		Goods sold to another company, for which our company has signed an agreement to repurchase at a set price that covers all costs related to the inventory.		Inventory		Balance Sheet
6.		Goods sold where large returns are predictable.		Cost of Goods Sold		Income Statement
7.		Goods sold f.o.b. shipping point that are in transit at December 31.		Cost of Goods Sold		Income Statement
8.		Freight charges on goods purchased.		Inventory		Balance Sheet
9.		Interest costs incurred for inventories that are routinely manufactured.		Interest Expense		Income Statement
10.		Costs incurred to advertise goods held for resale.		Advertising Expense		Income Statement
11.		Materials on hand not yet placed into production by a manufacturing firm.		Inventory		Balance Sheet
12.		Office supplies.		Office Supplies		Balance Sheet
13.		Raw materials on which a manufacturing firm has started production but which are not completely processed.		Inventory		Balance Sheet
14.		Factory supplies.		Inventory		Balance Sheet
15.		Goods held on consignment from another company.		Not Reported		Not Reported
16.		Costs identified with units completed by a manufacturing firm but not yet sold.		Inventory		Balance Sheet
17.		Goods sold f.o.b. destination that are in transit at December 31.		Inventory		Balance Sheet