J & J Products ordered $125,000 of raw material, FOB destination, from Acme Company on Dec

Marketing Dec 22, 2020

J & J Products ordered $125,000 of raw material, FOB destination, from Acme Company on Dec. 31st of 2015. The merchandise was shipped on January 2nd. J & J Products did not include it in their 2015 raw materials inventory. Prepare any necessary entries.

Expert Solution

Answer: No necessary entries required

J & J Products is the buyer in the given transaction. Under terms of FOB destination, inventories should be reported in the accounting records of the buyer upon receipt of the physical items bought. The date of delivery will be the date of transfer of ownership from the seller to the buyer. This is why the company is correct to not include the item in their 2015 raw materials inventory, and there are no necessary additional entries.

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