Smith-Miller Enterprises has inventory of $657,000 in its stores as of December 31.It also has two shipments in-transit that left the suppliers' warehouses by December 28.Both shipments are expected to arrive on January 5.The first shipment of $128,000 was sold f.o.b.destination and the second shipment of $76,000 was sold f.o.b.shipping point.What amount of inventory should Smith-Miller report on its balance sheet as of December 31?
A)$657,000
B)$861,000
C)$785,000
D)$733,000

Question

Quizplus · Accepted Answer

Smith-Miller should include the $76,000 shipment sold f.o.b. shipping point in its inventory as it was in transit and ownership transferred when it was shipped. The $128,000 shipment sold f.o.b. destination should not be included as ownership transfers upon arrival. Thus, the inventory is $657,000 + $76,000 = $733,000.

Smith-Miller Enterprises Has Inventory of $657,000 in Its Stores as of December