Question

Exam Exam 13 6 On December 31 of the current yea, Plunkett Company reported an ending inventory balance of $21.500. The following additional information is also available Punetto and hoped goods costing $17.900 10 Savannah Enterprises on December w ho m he died included in the ending inventory amount of $214500 . Plunkett purchased goods costing $43.500 on December 29 The goods were shippedron destination and were received by Plunkett on January 2 of the following year. The shipment was a rush order that was supposed to live by December These goods were included in the ending i ntory balance $2,500 . Plunkett's ending inventory balance of $21.50 included $.500 of goods being held on comm ent on le Company Punkt Company consignee) . Plunkers ending inventory balance of $2.500 od not include good costing S w eshed on December 27 w g o destination and were still in transit at year and Based on the above that the shortin ending wory on December M e Choice OSO O $155.700

Answer 1

Answer is given below with justification

Answer is Option 2) $ 155,700 $214,500 -$43,900 Ending Inventory balance Adjustments for Need not be included FOB destination wrongly included Consignment inventory cannot be included Need not be included Closing inventory to be reported $14,900 $155,700 Notes Since goods are sold on FOB shipping point sales is recognised on the day when inventory is shipped. Hence it is not point of inventory for month end and right to be excluded Since order is FOB destination and goods are not received on December 31st it should not be part of inventory. It should be excluded Consignment inventory cannot be part of inventory balance at the end of the period The goods are held on behalf of principal for selling as an agent 4 FOB destination shipped goods cannot be included in inventory till the time inventory is received at the destination. Hence it is right to be excluded