Umatilla Bank and Trust is considering giving Novak Corp. a loan. Before doing so, it decides that further discussions with Novak’s accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $261,940. Discussions with the accountant reveal the following. 1. Novak shipped goods costing $55,800 to Hemlock Company FOB shipping point on December 28. The goods are not expected to reach Hemlock until January 12. The goods were not included in the physical inventory because they were not in the warehouse. 2. The physical count of the inventory did not include goods costing $97,720 that were shipped to Novak FOB destination on December 27 and were still in transit at year-end. 3. Novak received goods costing $25,980 on January 2. The goods were shipped FOB shipping point on December 26 by Yanice Co. The goods were not included in the physical count. 4. Novak shipped goods costing $54,080 to Ehler of Canada FOB destination on December 30. The goods were received in Canada on January 8. They were not included in Novak physical inventory. 5. Novak received goods costing $40,170 on January 2 that were shipped FOB destination on December 29. The shipment was a rush order that was supposed to arrive December 31. This purchase was included in the ending inventory of $261,940. Determine the correct inventory amount on December 31. The correct inventory amount on December 31 $Enter a dollar amount

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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Umatilla Bank and Trust is considering giving Novak Corp. a loan. Before doing so, it decides that further discussions with Novak’s accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $261,940. Discussions with the accountant reveal the following.

1.		Novak shipped goods costing $55,800 to Hemlock Company FOB shipping point on December 28. The goods are not expected to reach Hemlock until January 12. The goods were not included in the physical inventory because they were not in the warehouse.
2.		The physical count of the inventory did not include goods costing $97,720 that were shipped to Novak FOB destination on December 27 and were still in transit at year-end.
3.		Novak received goods costing $25,980 on January 2. The goods were shipped FOB shipping point on December 26 by Yanice Co. The goods were not included in the physical count.
4.		Novak shipped goods costing $54,080 to Ehler of Canada FOB destination on December 30. The goods were received in Canada on January 8. They were not included in Novak physical inventory.
5.		Novak received goods costing $40,170 on January 2 that were shipped FOB destination on December 29. The shipment was a rush order that was supposed to arrive December 31. This purchase was included in the ending inventory of $261,940.

Determine the correct inventory amount on December 31.

The correct inventory amount on December 31

$Enter a dollar amount

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