At December 31, 2022, 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 12/27/22 terms FOB destination, but not due to be received until January 2
-$111,000 in goods sold by Howell with terms FOB destination on December 27.The goods are not expected to reach their destination until January 6.
-$9,000 of goods received on consignment from Westwood Company
What is Howell's correct ending inventory balance at December 31, 2022?
A)$710,000
B)$869,000
C)$590,000
D)$701,000

Question

At December 31, 2022, 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 12/27/22 terms FOB destination, but not due to be received until January 2
-$111,000 in goods sold by Howell with terms FOB destination on December 27.The goods are not expected to reach their destination until January 6.
-$9,000 of goods received on consignment from Westwood Company
What is Howell's correct ending inventory balance at December 31, 2022?
A)$710,000
B)$869,000
C)$590,000
D)$701,000

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. The $111,000 of goods sold FOB destination should remain in inventory until they reach the buyer. Thus, the correct inventory is $878,000 - $168,000 - $9,000 = $701,000.

At December 31, 2022, Howell Company's Inventory Records Indicated a Balance