The management of Savage, Inc. has engaged you to assist in the preparation of year-end (December 31) financial statements. You are told that on November 30, the correct inventory level was 145,730 units. During the month of December, sales totaled 138,630 units including 40,000 units shipped on consignment to AA Corp. A letter received from AA indicates that as of December 31, it has sold 15,200 units and was still trying to sell the remainder. A review of the December purchase orders to various suppliers shows the following: Purchase Invoice Quantity Order Date Date Date Terms Date in Units Shipped Received 12/31/07 01/02/08 4,200 01/02/08 01/05/08 FOB Destination 12/05/07 01/02/08 3,600 12/17/17 12/22/07 FOB Destination 12/06/07 01/03/08 7,900 01/05/08 O107/08 FOB Shipping FOB Shipping FOB Destination 12/18/07 12/20/07 8,000 12/29/07 01.02/08 12/22/07 01/05/08 4,600 01/04/08 O1.06/08 12/27/07 01/07/08 3,500 0105/08 O1.07/08 FOB Destination Savage, Inc. uses the "passing of legal title" for inventory recognition.
The management of Savage, Inc. has engaged you to assist in the preparation of year-end (December 31) financial statements. You are told that on November 30, the correct inventory level was 145,730 units. During the month of December, sales totaled 138,630 units including 40,000 units shipped on consignment to AA Corp. A letter received from AA indicates that as of December 31, it has sold 15,200 units and was still trying to sell the remainder. A review of the December purchase orders to various suppliers shows the following: Purchase Invoice Quantity Order Date Date Date Terms Date in Units Shipped Received 12/31/07 01/02/08 4,200 01/02/08 01/05/08 FOB Destination 12/05/07 01/02/08 3,600 12/17/17 12/22/07 FOB Destination 12/06/07 01/03/08 7,900 01/05/08 O107/08 FOB Shipping FOB Shipping FOB Destination 12/18/07 12/20/07 8,000 12/29/07 01.02/08 12/22/07 01/05/08 4,600 01/04/08 O1.06/08 12/27/07 01/07/08 3,500 0105/08 O1.07/08 FOB Destination Savage, Inc. uses the "passing of legal title" for inventory recognition.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
41. Goods purchased during December totaled
a. 11,600 units
b. 15,800 units
c. 19,500 units
d. 8,000 units
42. How many units were sold during December?
a. 138,630 units
b. 113,830 units
c. 98,630 units
d. 153,830 units
43. How many units should be included in Savage, Inc.’s inventory at December 31, 2007?
a. 18,700 units
b. 39,900 units
c. 43,500 units
d. 47,700 units
Transcribed Image Text:The management of Savage, Inc. has engaged you to assist in the preparation of year-end
(December 31) financial statements. You are told that on November 30, the corect
inventory level was 145,730 units. During the month of December, sales totaled 138,630
units including 40,000 units shipped on consignment to AA Corp. A letter received from
AA indicates that as of December 31, it has sold 15,200 units and was still trying to sell
the remainder.
A review of the December purchase orders to various suppliers shows the following:
Purchase
Quantity
in Units
Invoice
Date
Date
Terms
Order Date
Date
Shipped
Received
01.05/08
12/22/07
12/31/07
01/02/08
4,200
01/02/08
FOB Destination
12/05/07
01/02/08
3,600
12/17/17
FOB Destination
FOB Shipping
FOB Shipping
12/06/07
01/03/08
7,900
01/05/08
01.07/08
12/20/07
01.02/08
01.06/08
12/18/07
8,000
12/29/07
12/22/07
01/05/08
4,600
01/04/08
FOB Destination
12/27/07
01/07/08
3,500
01/05/08
01/07/08
FOB Destination
Savage, Inc. uses the "passing of legal title" for inventory recognition.
Page 13 of 20
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