Question

Umatilla Bank and Trust is considering giving Metlock, Inc. a loan. Before doing so, it decides that further discussions with Metlock’s accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $290,900. Discussions with the accountant reveal the following.

1.		Metlock shipped goods costing $31,300 to Hemlock Company FOB shipping point on December 28. The goods are not expected to reach Hemlock until January 12. The goods were not included in the physical inventory because they were not in the warehouse.
2.		The physical count of the inventory did not include goods costing $95,600 that were shipped to Metlock FOB destination on December 27 and were still in transit at year-end.
3.		Metlock received goods costing $23,900 on January 2. The goods were shipped FOB shipping point on December 26 by Yanice Co. The goods were not included in the physical count.
4.		Metlock shipped goods costing $39,700 to Ehler of Canada FOB destination on December 30. The goods were received in Canada on January 8. They were not included in Metlock’s physical inventory.
5.		Metlock received goods costing $49,200 on January 2 that were shipped FOB destination on December 29. The shipment was a rush order that was supposed to arrive December 31. This purchase was included in the ending inventory of $290,900.

Determine the correct inventory amount on December 31.

Correct inventory

$enter the correct inventory in dollars

Answer 1

	Amount $
Year End Balance	290,900
1) No Adjustment as the sale was on FOB Basis Dt. December 28	-
2.) To be added as Purchase was FOB basis Dt. December 27	95,600
3.) To be added as Purchase was FOB basis Dt. December 26	23,900
4) No Adjustment as the sale was on FOB Basis Dt. December 30	-
5.) No Adjustment as it should be the part of Inventory	-
The correct inventory amount on December 31.	410,400