The balance in Wellstocked Company's accounts payable account on December 31,2014,was $1,225,000 before the following information was considered:
•Goods shipped FOB destination on December 21,2014,from a vendor to Wellstocked were lost in transit.The invoice cost of $45,000 was not recorded by Wellstocked.On December 28,2014,Wellstocked notified the vendor of the lost shipment.
•Goods were in transit from a vendor to Wellstocked on December 31,2014.The invoice cost was $60,000,and the goods were shipped FOB shipping point on December 28,2014.Wellstocked received the goods on January 6,2015.
What amount should Wellstocked report as accounts payable in its December 31,2014,balance sheet?

Question

Quizplus · Accepted Answer

The goods shipped FOB shipping point should be included in accounts payable as they are considered Wellstocked's responsibility once shipped. Therefore, add $60,000 to the original balance of $1,225,000, resulting in $1,285,000. The lost goods shipped FOB destination are not Wellstocked's responsibility until received, so they are not included.

The Balance in Wellstocked Company's Accounts Payable Account on December