Wendt, Inc.counted its ending inventory as $178,000 at year-end, January 31, 2014.Upon review of the records, it was noted that the following items were in transit during the count:
A. $2,000 of goods shipped by a supplier to Wendt sent FOB destination on January 31 were received February 5, and were not counted by Wendt.
B. $5,000 of goods shipped by a supplier to Wendt sent FOB shipping point on January 30 were received February 2, and were not counted by Wendt.
C. $6,000 of goods shipped by Wendt to a customer FOB shipping point on January 31 were received by the customer February 3, and were counted by Wendt.
Determine the correct inventory balance at January 31.

Question

Quizplus · Accepted Answer

The $2,000 and $5,000 of goods that were not counted at year-end should be added to the ending inventory balance, but the $6,000 of goods that were shipped out by Wendt should be deducted from the ending inventory balance because they had not yet been delivered to the customer. Therefore, the correct inventory balance at January 31 is $178,000 + $2,000 + $5,000 - $6,000 = $179,000 - $6,000 = $173,000. However, the closest answer choice to this calculation is B, which is $177,000.