At December 31, 2014 Mohling Company's inventory records indicated a balance of $602,000. Upon further investigation it was determined that this amount included the following:
-$112,000 in inventory purchases made by Mohling shipped from the seller 12/27/14 terms FOB destination, but not due to be received until January 2nd
-$74,000 in goods sold by Mohling with terms FOB destination on December 27^th. The goods are not expected to reach their destination until January 6^th.
-$6,000 of goods received on consignment from Dollywood Company
What is Mohling's correct ending inventory balance at December 31, 2014?

Question

Quizplus · Accepted Answer

The correct ending inventory should exclude the $112,000 of inventory purchases not yet received (FOB destination) and the $6,000 of consignment goods. The $74,000 of goods sold should remain in inventory as they are still in transit (FOB destination). Therefore, the correct inventory is $602,000 - $112,000 - $6,000 = $484,000.

At December 31, 2014 Mohling Company's Inventory Records Indicated a Balance