Question

5. At December 31, 2018 (Year End), LSJ Company's inventory records indicated a balance of S1,128,000. Upon further investigation it was determined that this amount (S1.128.000) included the following: C C D 1 S168,000 in inventory purchases made by LSJ shipped from the seller 12/27/18 terms FOB destination, but not due to be received until January 2, 2019 D Di Di Di 2 $111,000 in goods sold by LSJ to a customer with terms FOB destination on December 27, 2018. The goods are not expected to reach their destination Di Di until January 6, 2019. Di Di $9,000 of goods received on consignment from Westwood Company. 3 Assuming that the S1,128,000 inventory balance is incorrect- What should LIS's corrected ending inventory balance be as of December 31, 2018? A) $951,000 B) $840,000 C) $1,119,000 D) $960,000 BJ Inc. Company made the following four inventory purchases in June: 47. Total Cost Per Unit Cost $5.50 S5.60 $ 825 1,120 1,140 885 $3,970 1 150 units June 10 200 units June $5.70 $5.90 15 200 units 28 150 units 700 units June June A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Therefore, the company sold 450 units. Using the average cost method, the amount allocated to the ending inventory rounded to the nearest dollar) on June 30 is A) $1,418 B) $1,320 C) $1,200 D) $1,170 12]

Answer 1

Solution 1:

Correct ending inventory on 31.12.2018 = Inventory reported - Inventory in transit under FOB destination - Goods on consignment

= $1,128,000 - $168,000 - $9,000 = $951,000

Hence option A is correct.

Solution 2:

Average cost per unit = Cost of goods available for sale/ Units available for sale = $3,970 /700 = $5.67143 per unit

Cost of ending inventory = 250 * $5.67143 = $1,418

Hence option A is correct.