As a result of a thorough physical inventory, Horace Company determined that it had inventory worth $320,000 at December 31, 2015. This count did not take into consideration the following facts: Herschel Consignment currently has goods worth $47,000 on its sales floor that belong to Horace but are being sold on consignment by Herschel. The selling price of these goods is $75,000. Horace purchased $22,000 of goods that were shipped on December 27, FOB destination, that will be received by Horace on January 3. Determine the correct amount of inventory that Horace should report.
A)$320,000.
B)$340,000.
C)$367,000.
D)$387,000.

Question

Quizplus · Accepted Answer

Horace should include the value of the consignment goods in its inventory, which is $47,000. Additionally, since the goods shipped FOB destination should be included in inventory, Horace should also include the cost of these goods, which is $22,000. Therefore, the correct amount of inventory that Horace should report is $320,000 + $47,000 + $22,000 = $367,000. Choice C is the only option that reflects this amount.

As a Result of a Thorough Physical Inventory, Horace Company