Inventoriable Costs : Assume that in an annual audit of Harlowe Inc. at December 31, 2014 , you find the following transactions near the closing date. 1) A special machine , fabricated to order for a customer , was finished and specifally segregated in the back part of the shipping room on December 31, 2014. The customer was billed on that date and the machine excluded from inventory although it was shipped on January 4, 2015. 2) Merchadise costing $2,800 was recevied on January 3, 2015, and the related purchase invoice recorded January 5. The invoice showed the shipment was made on Decemeber 29, 2014 , f.o.b. destination 3) A packing case containing a product costing $3,400 was standing in the shipping room when the physical inventory was taken. It was not included in the inventory because it was marked " Hold for shipping instructions." Your investigation revealed theat the customer's order was dated December 18,2014, but that the case was shipped and the customer billed on January 10,2015.
E8-3 Inventoriable Costs : Assume that in an annual audit of Harlowe Inc. at December 31, 2014 , you find the following transactions near the closing date.
1) A special machine , fabricated to order for a customer , was finished and specifally segregated in the back part of the shipping room on December 31, 2014. The customer was billed on that date and the machine excluded from inventory although it was shipped on January 4, 2015.
2) Merchadise costing $2,800 was recevied on January 3, 2015, and the related purchase invoice recorded January 5. The invoice showed the shipment was made on Decemeber 29, 2014 , f.o.b. destination
3) A packing case containing a product costing $3,400 was standing in the shipping room when the physical inventory was taken. It was not included in the inventory because it was marked " Hold for shipping instructions." Your investigation revealed theat the customer's order was dated December 18,2014, but that the case was shipped and the customer billed on January 10,2015. The product was a stock item of your client .
Instructions : Assuming that each of the amounts is material , state whether the merchandise should be included in the client's inventory , and give your reason for your decision on each item.
Inventory is the material used to manufacture the products. It would be in the work in process or the finished goods that represents the current asset of the company.
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