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Homework answers / question archive / The Coronado Hat Shop Limited counted the entire inventory in its store on August 31 and arrived at a total inventory cost of $93,800
The Coronado Hat Shop Limited counted the entire inventory in its store on August 31 and arrived at a total inventory cost of $93,800. The count included $8,000 of inventory held on consignment for a local designer; $520 of inventory that was being held for customers who were deciding if they actually wanted to purchase the merchandise; and $1,000 of inventory that had been sold to customers but was being held for alterations. There were two shipments of inventory received on September 1. The first shipment cost $4,600. It had been shipped on August 29, terms FOB destination. The second shipment cost $4.540. plus freight charges of $240. It had been shipped on August 28, terms FOB shipping point. Neither of these shipments was included in the August 31 count. Calculate the correct cost of the inventory on August 31. Inventory cost $
Inventory cost = 93800 - 8000-1000 + 4540 +240
Correct inventory cost = 89580
Inventory held on consignment $8000 should not be included in the cost. Products held on consignment are included in the local designers inventory, not the consignee's, even though they are not in the consignor's physical possession.
$520 inventory held for customers should not be deducted because the control of the goods is in our hands. The control is not transferred yet.
$1000 goods already sold should not be included in inventory as its risk and rewards are transferred to the buyer.
FOB destination" means the seller retains the risk of loss until the goods reach the buyer.so goods received of $4600 should not be included in current year inventory.
The term FOB shipping point is a contraction of the term "Free on Board Shipping Point." The term means that the buyer takes delivery of goods being shipped to it by a supplier once the goods leave the supplier's shipping dock.so purchase of $4540 and freight charges $240 of is also included included
