At December 31, 2017 Howell Company's inventory records indicated a balance of $878,000. Upon further investigation it was determined that this amount included the following:
-$168,000 in inventory purchases made by Howell shipped from the seller 12/27/17 terms FOB destination, but not due to be received until January 2nd
-$111,000 in goods sold by Howell with terms FOB destination on December 27^th. The goods are not expected to reach their destination until January 6^th.
-$9,000 of goods received on consignment from Westwood Company
What is Howell's correct ending inventory balance at December 31, 2017?

Question

Quizplus · Accepted Answer

The correct ending inventory should exclude the $168,000 of inventory purchases not yet received and the $9,000 of consigned goods, but should include the $111,000 of goods sold FOB destination, as they are still Howell's inventory until delivered. Thus, $878,000 - $168,000 - $9,000 = $701,000.

At December 31, 2017 Howell Company's Inventory Records Indicated a Balance