Question

E8.2B (L0 2)

(Inventoriable Goods and Costs)

In your audit of Ali Company, you find that a physical inventory on December 31, 2020, showed merchandise with a cost of $200,000 was on hand at that date. You also discover the following items were all excluded from the $200,000:

1. Merchandise of $20,000 which is held by Ali on consignment. The consignor is the Max Suzuki Company.

2. Merchandise costing $25,000 which was shipped by Ali f.o.b. destination to a customer on December 31,

2020. The customer was expected to receive the merchandise on January 6, 2021.

3. Merchandise costing $23,000 which was shipped by Ali f.o.b. shipping point to a customer on December

29, 2020. The customer was scheduled to receive the merchandise on January 2, 2021.

4. Merchandise costing $60,000 shipped by a vendor f.o.b. destination on December 30, 2020, and

received by Ali on January 4, 2021.

5. Merchandise costing $42,000 shipped by a vendor f.o.b. shipping point on December 31, 2020, and

received by Ali on January 5, 2021.

Instructions

Based on the above information, calculate the amount that should appear on Ali’s balance sheet at December

31, 2020, for inventory.

Answer 1

	inventory balane shown					200,000
1)	held on cosnsignment					0
2)	FOB destination sold		(yet the owner)			25,000
3)	FOB shiipping point		(title passed)			0
4)	FOB destination purchased					0
5)	FOB shipping point purchased					42,000
	Amount that should applear in balance sheet					267,000	answer