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Millar Company ships merchandise to Branyan Corporation on December 30
Millar Company ships merchandise to Branyan Corporation on December 30. The merchandise reaches the buyer on January 5. Indicate the terms of sale that will result in the goods being included in
(1) Millar's December 31 inventory.
(2) Branyan's December 31 inventory.
(3) Under what circumstances should Millar Company include consigned goods in its inventory?
Expert Solution
1)
When the asset is shipped FOB destination, the Inventory shipped on December 30 will be included in Millar's December 31 Inventory. It is because under FOB Destination, the ownership of the shipped products will be transferred to the buyer upon receipt of the buyer.
2)
When the asset is shipped FOB Shipping Point, the inventory shipped on December 30 will be included in Branyan's December 31 Inventory. It is because under FOB Shipping Point, the ownership of the shipped product will be transferred to the buyer upon shipment of the seller.
3)
Millar will include consigned goods in its inventory if the shipped products on December 30 is a consigned goods to Branyan's December 31. In these situation, Millar will be the consignor and Branyan will be the consignee. Consignor owns the product and the consignee is an agent that helps in selling the product.
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