Spring Hill,Inc.sells merchandise to customers worldwide in a highly competitive industry.During June,Spring Hill completed the following transactions:
∙ June 1: Purchased 200 units of merchandise for $11 each, FOB shipping point.
∙ June 1: Paid $205 of freight costs for the merchandise.
∙ June 3: Paid $1,200 to the local radio station for an advertising campaign related to the merchandise.
∙ June 9: Sold 180 units of the merchandise to customers for $26 each.
Required:
1.Determine the cost of the inventory on the books of Spring Hill,Inc.,on June2.
2.When will the costs that are included in inventory become expenses?
3.Which financial statement will report the costs that do NOT attach to inventory?

Question

Spring Hill,Inc.sells merchandise to customers worldwide in a highly competitive industry.During June,Spring Hill completed the following transactions:
∙ June 1: Purchased 200 units of merchandise for $11 each, FOB shipping point.
∙ June 1: Paid $205 of freight costs for the merchandise.
∙ June 3: Paid $1,200 to the local radio station for an advertising campaign related to the 	merchandise.
∙ June 9: Sold 180 units of the merchandise to customers for $26 each.
Required:
1.Determine the cost of the inventory on the books of Spring Hill,Inc.,on June2.
2.When will the costs that are included in inventory become expenses?
3.Which financial statement will report the costs that do NOT attach to inventory?

Quizplus · Accepted Answer

The Answer of Spring Hill,Inc.sells merchandise to customers worldwide in a highly competitive industry.During June,Spring Hill completed the following transactions:
∙ June 1: Purchased 200 units of merchandise for $11 each, FOB shipping point.
∙ June 1: Paid $205 of freight costs for the merchandise.
∙ June 3: Paid $1,200 to the local radio station for an advertising campaign related to the 	merchandise.
∙ June 9: Sold 180 units of the merchandise to customers for $26 each.
Required:
1.Determine the cost of the inventory on the books of Spring Hill,Inc.,on June2.
2.When will the costs that are included in inventory become expenses?
3.Which financial statement will report the costs that do NOT attach to inventory?