Hampton Co. took a physical count of its inventory on December 31. In addition, it had to decide whether or not the following items should be added to this count. (a)Merchandise on hand had been sold earlier in the year but had been returned by customers for various warranty repairs.(b)Hampton Co. sent merchandise on a consignment basis on December 31 just prior to the physical count.(c)On December 22, Hampton Co. ordered merchandise on FOB destination terms. The merchandise was shipped by the supplier on December 30 but had not been received by December 31.(d)On December 27, Hampton Co. ordered merchandise on FOB shipping point terms. The merchandise was shipped on December 29 but had not been received by December 31.(e)Merchandise sold FOB shipping point on December 31 was picked up by the freight company just before closing on December 31.(f)Merchandise shipped to a customer FOB shipping point was picked up by the freight company on December 28 but had not arrived at its destination as of December 31. Indicate which items should be added to (answer: yes) and which items should not be added to (answer: no) the December 31 inventory count.

Merchandise sold are the goods which are sold by the seller and ownership is transferred to the customer, then only the merchandise is treated as sale. Sale can be made on cash basis or credit basis.a. No, this merchandise is not counted in Dec 31 as it is sold in early months and returned for warranty repairs only, which will be returned to customer after repair. b. Yes, such sold goods will be count on the Dec inventory as they are sent for consignment, not sold yet. Ownership of the goods are not transferred yet c. No, such goods are not counted as they are not received yet by the company. d. No, goods are not received yet and ownership is not transferred yet. e. No, such goods are not included as they shipped for sale and ownership is transferred. f. Yes, such goods are not counted as they are shipped and ownership is transferred.

Answered: Hampton Co. took a physical count of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Hampton Co. took a physical count of its inventory on December 31. In addition, it had to decide whether or not the following items should be added to this count.

(a)	Merchandise on hand had been sold earlier in the year but had been returned by customers for various warranty repairs.
(b)	Hampton Co. sent merchandise on a consignment basis on December 31 just prior to the physical count.
(c)	On December 22, Hampton Co. ordered merchandise on FOB destination terms. The merchandise was shipped by the supplier on December 30 but had not been received by December 31.
(d)	On December 27, Hampton Co. ordered merchandise on FOB shipping point terms. The merchandise was shipped on December 29 but had not been received by December 31.
(e)	Merchandise sold FOB shipping point on December 31 was picked up by the freight company just before closing on December 31.
(f)	Merchandise shipped to a customer FOB shipping point was picked up by the freight company on December 28 but had not arrived at its destination as of December 31.

Indicate which items should be added to (answer: yes) and which items should not be added to (answer: no) the December 31 inventory count.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Financial Reporting in Hyperinflationary Economies

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions