As a result of a thorough physical inventory, Greeley Company determined that it had inventory costing $325,000 at December 31, 2022. This count did not take into consideration the following facts: Walker Consignment currently has goods costing $47,000 on its sales floor that belong to Greeley but are being sold on consignment by Walker. The selling price of these goods is $75,000. Greeley purchased $22,000 of goods that were shipped on December 27, FOB destination, that will be received by Greeley on January 3. Determine the correct amount of inventory that Greeley should report.

Question

Quizplus · Accepted Answer

To determine the correct amount of inventory, we must add the cost of consigned goods ($47,000) and subtract the cost of goods shipped FOB destination but not yet received ($22,000). 
$325,000 (physical count) + $47,000 (consignment) - $22,000 (goods shipped FOB but not received) = $372,000. Therefore, Greeley should report $372,000 as its correct amount of inventory.

As a Result of a Thorough Physical Inventory, Greeley Company