Assume that the total inventory on hand at the end of the year as determined by taking a physical inventory is $63,000. Excluded from the count were purchases of $6,000 in transit under FOB shipping point terms. What is the cost of inventory reported on the balance sheet?

Question

Quizplus · Accepted Answer

Under FOB shipping point terms, ownership of the goods transfers to the buyer when the goods are shipped. Therefore, the $6,000 of purchases in transit should be included in the inventory, making the total inventory cost $69,000.

Assume That the Total Inventory on Hand at the End