At December 31, 2020, Jefferson, Inc. had inventory on hand amounting to $270,000. The following items were not included in this inventory: Goods sold and still in transit, shipped Dec. 29 FOB destination, sales price $12,000, freight costs $500.Goods held by Johnson on consignment from Miller Company, sales price $12,500, shipping costs $300.Goods returned by customers and held pending inspection, cost $1,100.On Jan. 1, 2021, a monthly freight bill for $1,600 was received. The bill specifically related to merchandise purchased in December 2020, 40 percent of which was sold in December. No related adjustment had yet been made. Jefferson sells at a gross profit of 25% on cost. Required:Compute the cost of ending inventory to be reported on Jefferson's December 31, 2020, balance sheet.$

Cost of Goods sold on FOB destination = Sales price / (1+ Gross profit rate) = $12,000 / (1 + 0.25)…

Answered: At December 31, 2020, Jefferson, Inc.…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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At December 31, 2020, Jefferson, Inc. had inventory on hand amounting to $270,000. The following items were not included in this inventory:

Goods sold and still in transit, shipped Dec. 29 FOB destination, sales price $12,000, freight costs $500.
Goods held by Johnson on consignment from Miller Company, sales price $12,500, shipping costs $300.
Goods returned by customers and held pending inspection, cost $1,100.
On Jan. 1, 2021, a monthly freight bill for $1,600 was received. The bill specifically related to merchandise purchased in December 2020, 40 percent of which was sold in December. No related adjustment had yet been made.

Jefferson sells at a gross profit of 25% on cost.

Required:
Compute the cost of ending inventory to be reported on Jefferson's December 31, 2020, balance sheet.
$

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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