Keiko Company took a physical inventory at December 31,2010 and determined that $ ¥ 3,030,000 $ 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, 2011. What amount should Keiko report as inventory on its December 31,2010 statement of financial position?

Question

Quizplus · Accepted Answer

Keiko should include the consigned goods of ¥ 700,000 in its inventory, as they are still owned by Keiko. The goods sold f.o.b. shipping point should not be included in the inventory, as ownership transferred to the buyer when shipped. Therefore, the inventory is $ ¥ 3,030,000 + ¥ 700,000 = ¥ 3,730,000 $.

Keiko Company Took a Physical Inventory at December 31,2010 and Determined