Keiko Company took a physical inventory at December 31, 2013 and determined that ¥3,530,000 of goods were on hand. In addition, the company had goods consigned with Chang Company that had a cost of ¥700,000. On December 29, Keiko sold and shipped F.o.b. shipping point ¥600,000 worth of inventory. These goods arrived at the buyer's place of business on January 4, 2014. What amount should Keiko report as inventory on its December 31, 2013 statement of financial position?

Question

Quizplus · Accepted Answer

The inventory on hand at December 31, 2013 is ¥3,530,000. In addition, the consigned goods of ¥700,000 should also be included in the inventory since it is owned by Keiko but held by the consignee. Therefore, the total inventory should be ¥4,230,000 (¥3,530,000 + ¥700,000). The sold goods F.o.b. shipping point on December 29 should not be included in the inventory since title passed to the buyer when the goods were shipped.

Keiko Company Took a Physical Inventory at December 31, 2013