The Mateo Corporation's inventory at December 31, 2013, was $325,000 based on a physical count priced at cost, and before any necessary adjustment for the following: ▪ Merchandise costing $30,000, shipped f.o.b. shipping point from a vendor on December 30, 2013, was received on January 5, 2014.
▪ Merchandise costing $22,000, shipped f.o.b. destination from a vendor on December 28, 2013, was received on January 3, 2014.
▪ Merchandise costing $38,000 was shipped to a customer f.o.b. destination on December 28, arrived at the customer's location on January 6, 2014.
▪ Merchandise costing $12,000 was being held on consignment by Traynor Company.
What amount should Mateo Corporation report as inventory in its December 31, 2013, balance sheet?

Question

Quizplus · Accepted Answer

To calculate the correct inventory balance, we need to make the following adjustments:
- Add the merchandise received f.o.b. shipping point: $30,000
- Add the merchandise received f.o.b. destination: $22,000
- Deduct the merchandise shipped f.o.b. destination: $38,000
- Exclude the merchandise held on consignment: $12,000

So, the adjusted inventory balance is:
$325,000 + $30,000 + $22,000 - $38,000 - $12,000 = $327,000

Therefore, the correct answer is C) $405,000, which is the adjusted inventory balance plus the consignment inventory held by Traynor Company ($78,000 + $12,000).

The Mateo Corporation's Inventory at December 31, 2013, Was $325,000