Beck Company has inventory of $725,000 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 $210,000 was sold f.o.b.destination and the second shipment of $102,000 was sold f.o.b.shipping point.Beck Company also has consigned goods of $72,000 awaiting sale with Meyer Company.What amount of inventory should Beck Company report on its balance sheet as of December 31?
A)$725,000
B)$899,000
C)$1,007,000
D)$1,109,000

Question

Quizplus · Accepted Answer

The inventory on December 31 should include the inventory in stores, the shipment sold f.o.b. destination, and the consigned goods.

Inventory in stores: $725,000 
Shipment sold f.o.b. destination: not included in the inventory on December 31, since the ownership and risk of loss transfer to the buyer upon delivery. 
Shipment sold f.o.b. shipping point: included in the inventory on December 31, since the ownership and risk of loss transfer to the buyer upon shipment. 
Consigned goods: included in the inventory on December 31, since the ownership remains with Beck Company until the goods are sold.

Inventory on December 31: 
$725,000 (inventory in stores) + $102,000 (shipment sold f.o.b. shipping point) + $72,000 (consigned goods) = $899,000.

Therefore, the best choice is (B) $899,000.

Beck Company Has Inventory of $725,000 in Its Stores as of December