Black Company determined its December 31, 2010 inventory to be $1, 000, 000 based on a physical count priced at cost.It then determined the following additional information: Merchandise costing $90, 000, was shipped FOB shipping point from a vendor on December 30, 2010.This merchandise was received and recorded on January 5, 2011.
Goods costing $120, 000 were staged on the shipping dock and excluded from inventory although shipment was not made until January 4, 2011.The goods were billed to the customer FOB shipping point on December 30, 2010.
What is Black's ending inventory for its December 31, 2010 balance sheet?
A)$1, 000, 000
B)$1, 090, 000
C)$1, 120, 000
D)$1, 210, 000

Question

Quizplus · Accepted Answer

The correct ending inventory is $1,210,000. This includes the original inventory count of $1,000,000, plus the merchandise costing $90,000 shipped FOB shipping point (ownership transfers at shipping point, so it should be included in the buyer's inventory if not received by year-end), and the goods costing $120,000 that were excluded from inventory but should be included since they were still on the company's premises and ownership had not transferred (FOB shipping point, but not shipped until January).

Black Company Determined Its December 31, 2010 Inventory to Be