Pettis needs to determine its year-end inventory. The warehouse contains 20,000 units, of which 3,000 were damaged by flood and cannot be sold. Another 2,000 units, shipped FOB shipping point, are in transit. The company also consigns goods and has 4,000 units at a consignee's location. How many units should Pettis include in its year-end inventory?
A) 29,000
B) 21,000
C) 23,000
D) 19,000
E) 26,000

Question

Quizplus · Accepted Answer

The year-end inventory includes all units owned by the company and held in its warehouse or in transit. Damaged units are not included in inventory. Consigned goods are not owned by the company and are not included in inventory. Therefore, the year-end inventory is 20,000 - 3,000 = 17,000 units, plus the 2,000 units in transit, for a total of 17,000 + 2,000 = 19,000 units.

Pettis Needs to Determine Its Year-End Inventory