Elan Company's Accounts Payable balance at December 31,2014,was $1,800,000 before considering the following transactions:
•Goods were in transit from a vendor to Elan on December 31,2014.The invoice price was $100,000,and the goods were shipped FOB shipping point on December 29,2014.The goods were received on January 4,2015.
•Goods shipped to Elan FOB shipping point on December 20,2014,from a vendor were lost in transit.The invoice price was $50,000.On January 5,2015,Elan filed a $50,000 claim against the common carrier.
In its December 31,2011,balance sheet,Elan should report Accounts Payable of

Question

Quizplus · Accepted Answer

The goods in transit were shipped FOB shipping point, which means that the ownership of the goods passed to Elan when the goods were shipped. Therefore, Elan should record the goods in transit as an Accounts Payable of $100,000. The goods lost in transit were shipped FOB shipping point, which means that the ownership of the goods passed to Elan when the goods were shipped. Therefore, Elan should not record the goods lost in transit as an Accounts Payable.

Elan Company's Accounts Payable Balance at December 31,2014,was $1,800,000 Before