At December 31, 2016, Jefferson, Inc. had inventory on hand amounting to $270,000. The following items were not
included in this inventory:
∙ Goods sold and still in transit, shipped Dec. 29 FOB destination, sales price $12,000, freight costs $500.
∙ Goods held by Johnson on consignment from Miller Company, sales price $12,500, shipping costs $300.
∙ Goods returned by customers and held pending inspection, cost $1,100.
On Jan. 1, 2017, a monthly freight bill for $1,600 was received. The bill specifically related
∙ to merchandise purchased in December 2016, 40 percent of which was sold in December.
No related adjustment had yet been made.
Jefferson sells at a gross profit of 25% on cost.
Required:
Compute the cost of ending inventory to be reported on Jefferson's December 31, 2016, balance sheet.

Question

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The Answer of At December 31, 2016, Jefferson, Inc. had inventory on hand amounting to $270,000. The following items were not
included in this inventory:
∙ Goods sold and still in transit, shipped Dec. 29 FOB destination, sales price $12,000, freight costs $500.
∙ Goods held by Johnson on consignment from Miller Company, sales price $12,500, shipping costs $300.
∙ Goods returned by customers and held pending inspection, cost $1,100.
On Jan. 1, 2017, a monthly freight bill for $1,600 was received. The bill specifically related
∙ to merchandise purchased in December 2016, 40 percent of which was sold in December.
No related adjustment had yet been made.
Jefferson sells at a gross profit of 25% on cost.
Required:
Compute the cost of ending inventory to be reported on Jefferson's December 31, 2016, balance sheet.