Question

In: Accounting

On December 31, 2019, of the current year Company A physically counted $1,500,000 of inventory. The...

On December 31, 2019, of the current year Company A physically counted $1,500,000 of inventory. The following additional information is also available:

Company A sold goods for $250,000 to Dog Enterprise. Company A had originally purchased the goods for $175,000. The order was shipped to Dog Enterprise FOB shipping point on December 28, 2019 and arrived at Dog Enterprise facility on January 2, 2020.

Question 1: Does Company A adjust or not adjust the physical count for the in-transit goods? Explain.

COMPANY A purchased goods costing $40,000 from vendor Joe's Hardware. Joe's Hardware shipped the goods to Company A FOB shipping point on December 29, 2019 and the order was delivered on January 1, 2020 The shipment was a rush order that was supposed to arrive by December 31.

Question 2: Does Company A adjust or not adjust the physical count for the in-transit goods? Explain.

Company A sold goods for $250,000 to Door Company. Company A had originally purchased the goods for $175,000. The order was shipped to Door Company, FOB Destination on December 28, 2019 and arrived at Door Company facility on January 4, 2020.

Question 3: Does Company A adjust or not adjust the physical count for the in-transit goods? Explain.

Company A purchased goods costing $30,000 from vendor Kitchen Company. Kitchen shipped the goods to Company A FOB destination on December 30, 2019 and the order was delivered on January 3, 2020.

Question 4, does Smith adjust or not adjust the physical count for the in-transit goods? Explain.

Expert Solution

Dear Student,

Please find the solution below, the pictures enclosed.

Remarks:

- In this question, Freight on board (FOB) means it indicates the cost and risks of shipped goods shift from buyer to seller.

- Try to understand the term of FOB shipping point and FOB destination from notes.

- Question 4. In this question, it's difficult for me to found out who is smith ( buyer or seller).

however, I hoped now you are able to understand found out the solution of question 4.

ekkarill92 answered 1 year ago

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