As a result of a thorough physical inventory, Horace Company determined that it had inventory worth $320,000 at December 31, 2020.This count did not take into consideration the following facts: Herschel Consignment currently has goods worth $47,000 on its sales floor that belong to Horace but are being sold on consignment by Herschel.The selling price of these goods is $75,000.Horace purchased $22,000 of goods that were shipped on December 27, FOB destination, that will be received by Horace on January 3.Determine the correct amount of inventory that Horace should report.

Question

Quizplus · Accepted Answer

Horace Company's physical inventory count did not take into account the goods on consignment or the goods shipped FOB destination. Therefore, to determine the correct amount of inventory that Horace should report, we need to add the value of these goods to the initial count of $320,000:

Value of goods on consignment: $47,000
Value of goods shipped FOB destination: $22,000

Therefore, the correct amount of inventory that Horace should report is:

$320,000 + $47,000 + $22,000 = $389,000

The closest option to this amount is C ($367,000), which is the correct answer.

As a Result of a Thorough Physical Inventory, Horace Company