Question

BAMA company is counting its inventory. According to records, the inventory balance at
yearend was $740,000. However, the following information was not considered when
determining that amount.
1. Included in the company’s count were goods with a cost of $250,000 that the
company is holding on consignment. The goods belong to Kroeger Corporation.
2. The physical count did not include goods purchased by BAMA with a cost of
$40,000 that were shipped FOB destination on December 28 and did not arrive
at BAMA warehouse until January.
3. 3. Included in the inventory account was $14,000 of office supplies that were
stored in the warehouse and were to be used by the company’s supervisors and
managers during the coming year.
4. On December 29, BAMA shipped goods with a selling price of $80,000 and a
cost of $60,000 to Macchia Sales Corporation FOB shipping point. The goods
arrived on January 3. Macchia had only ordered goods with a selling price of
$10,000 and a cost of $8,000. However, a sales manager at BAMA had
authorized the shipment and said that if Machia wanted to ship the goods back
next week, it could.
Instructions : determine the correct inventory amount.

Answer 1