Question
In your audit of Jason Allen Company, you find that a physical inventory on December 31, 2020, showed merchandise with a cost of $397,710 was on hand at that date. You also discover the following items were all excluded from the $397,710. 1. Merchandise of $63,390 which is held by Allen on consignment. The consignor is the Max Suzuki Company. 2. Merchandise costing $41,060 which was shipped by Allen f.o.b. destination to a customer on December 31, 2020. The customer was expected to receive the merchandise on January 6, 2021. 3. Merchandise costing $41,540 which was shipped by Allen f.o.b. shipping point to a customer on December 29, 2020. The customer was scheduled to receive the merchandise on January 2, 2021. 4. Merchandise costing $85,920 shipped by a vendor fo.b. destination on December 30, 2020, and received by Allen on January 4, 2021. 5. Merchandise costing $55,080 shipped by a vendor f.o.b.shipping point on December 31, 2020, and received by Allen on January 5, 2021. Based on the above information, calculate the amount that should appear on Allen’s balance sheet at December 31, 2020, for inventory. Inventory as on December 31, 2020 $
Answer
| Inventory as reported | 397710 | |
| 1 | 0 | Correctly excluded as Allen is not the owner |
| 2 | 41060 | To be included as Allen is still the owner and ownership has not yet passed to buyer |
| 3 | 0 | Correctly excluded as ownership already passed to buyer |
| 4 | 0 | Correctly excluded as Allen is not the owner |
| 5 | 55080 | To be included as ownership has been passed and Allen is the owner |
| Inventory as on December 31,2020 | 493850 |
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