Question

The following inventory transactions took place near December 31, 2021, the end of the Rasul Company's fiscal year-end:

1. On December 27, 2021, merchandise costing $2,000 was shipped to the Myers Company on consignment The shipment arrived at Myers's location on December 29, but none of the merchandise was sold by the end of the year. The merchandise was not included in the 2021 ending inventory. 

2. On January 5, 2022, merchandise costing $8,000 was received from a supplier and recorded as a purchase on that date and not included in the 2021 ending inventory. The invoice revealed that the shipment was made f.o.b. shipping point on December 28, 2021. 

3. On December 29, 2021, the company shipped merchandise costing $12,000 to a customer f.o.b. destination The goods, which arrived at the customer's location on January 4, 2022, were not included in Rasul's 2021 ending inventory. The sale was recorded in 2021. 

4. Merchandise costing $4,000 was received on December 28, 2021, on consignment from the Aborn Company. A purchase was not recorded and the merchandise was not included in 2021 ending inventory. 

5. Merchandise costing $6,000 was received and recorded as a purchase on January 8, 2022. The invoice revealed that the merchandise was shipped from the supplier on December 28, 2021, f.o.b. destination. The merchandise was not included in 2021 ending inventory. 

Required: 

State whether Rasul correctly accounted for each of the above transactions. Give the reason for your answer.

Answer 1

1)	Goods shipped on consignment should be included in inventory as title to the goods pass
	to the consignee only when the goods are sold , since goods are not sold so Consignor
	Rasul has the title to the goods
2)	Should be included in inventory
	FOB shipping point means title to the goods passes from the seller to the buyer when
	the goods are shipped
	since the goods were shipped on dec 28,2021 Rasul became the owner of the goods
	on this date
3)	should be included in inventory
	FOB destination means title to the goods passes from the seller to the buyer when the
	goods reach the destination
	since the goods reached the destination on jan 4,2022 so the title remains with Rasul
	till then
4)	correctly excluded
	Goods shipped on consignment should be included in inventory as title to the goods pass
	to the consignee only when the goods are sold , since goods are not sold so Consignor
	Abron has the title to the goods
5)	Correctly excluded
	FOB destination means title to the goods passes from the seller to the buyer when the
	goods reach the destination
	since the goods reached the destination on jan 8,2022 so the title remains with supplier
	till then hence inventory is to be excluded from dec 31,2021