Beyer Company bought inventory FOB shipping point from Sellar Company for $4,000 cash,including shipping charges.On December 31,the last day of the accounting year,the goods were on a truck owned by Common Carrier,Inc.,and not expected to arrive until January 3.Which company should include these goods in its December 31 inventory?
A) Beyer should include the $4,000 in its inventory
B) Beyer owns the inventory, but Common Carrier has possession of it. Each of them should include half of the inventory, $2,000 each
C) Common Carrier should include the $4,000 in its inventory, since the inventory is on its truck
D) Beyer owns the inventory, but Common Carrier has possession of it. Neither of them can include the $4,000 in its December 31 inventory

Question

Quizplus · Accepted Answer

Beyer Company should include the inventory in its December 31 inventory because it bought the inventory FOB shipping point, which means the ownership and title of the goods transfer to the buyer upon shipment. The fact that the inventory is in transit with Common Carrier and is not expected to arrive until January 3 does not affect Beyer's ownership and title of the goods. Additionally, Beyer already paid for the inventory, including shipping charges, so they have fulfilled their obligation as the buyer.

Beyer Company Bought Inventory FOB Shipping Point from Sellar Company