Asked by Kesha Boston on May 23, 2024
Verified
Near the end of 2010, Bruce Co.made the following purchases.The months involved in all cases are December 2010 and January 2011. Date Date Date Date Goods Invoice Goods Invoice Amount FOB Shipped Mailed Rec’d Rec’d $1,575 Destination 12/291/21/51/42,430 Shipping Point 1/212/291/412/301,890 ShippingPoint 12/281/21/31/42,700 Destination 12/2912/271/212/28\begin{array}{llllll}&&\text { Date } & \text { Date } & \text { Date } & \text { Date } \\&&\text { Goods } & \text { Invoice } & \text { Goods } & \text { Invoice}\\\text { Amount } & \text { FOB } & \text { Shipped } & \text { Mailed } & \text { Rec'd } & \text { Rec'd }\\\$ 1,575 & \text { Destination } & 12 / 29 & 1 / 2 & 1 / 5 & 1 / 4 \\2,430 & \text { Shipping Point } & 1 / 2 & 12 / 29 & 1 / 4 & 12 / 30 \\1,890 & \text { ShippingPoint } & 12 / 28 & 1 / 2 & 1 / 3 & 1 / 4 \\2,700 & \text { Destination } & 12 / 29 & 12 / 27 & 1 / 2 & 12 / 28\end{array} Amount $1,5752,4301,8902,700 FOB Destination Shipping Point ShippingPoint Destination Date Goods Shipped 12/291/212/2812/29 Date Invoice Mailed 1/212/291/212/27 Date Goods Rec’d 1/51/41/31/2 Date Invoice Rec’d 1/412/301/412/28
What amount of the above purchases should be included in inventory at December 31, 2010?
A) $1, 575
B) $1, 890
C) $4, 320
D) $4, 575
FOB Destination
A shipping term where the seller bears the freight charges and maintains ownership until the goods are delivered to the buyer's location.
FOB Shipping Point
A term indicating that the buyer takes ownership of goods being shipped to them at the point of departure from the seller's shipping dock.
Invoice
A document issued by a seller to a buyer that lists the products or services provided, along with quantities, prices, and payment terms.
- Measure the monetary implications of maintaining inventory under differing inventory cost flow assumptions such as FIFO, LIFO, and the employment of weighted average techniques.
- Determine the appropriate accounting for goods in transit, consigned goods, and goods dispatched on consignment when recording inventory.
Verified Answer
LV
Lourdy VincentMay 25, 2024
Final Answer :
B
Explanation :
Only the purchases made in December 2010 should be included in inventory at December 31, 2010. The purchases made in January 2011 should be included in inventory at the end of January 2011. The purchases made in December 2010 are $300 + $1,200 + $390 = $1,890.
Learning Objectives
- Measure the monetary implications of maintaining inventory under differing inventory cost flow assumptions such as FIFO, LIFO, and the employment of weighted average techniques.
- Determine the appropriate accounting for goods in transit, consigned goods, and goods dispatched on consignment when recording inventory.