FUND.ACCT.PRIN.-CONNECT ACCESS
25th Edition
ISBN: 9781260780185
Author: Wild
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 6, Problem 1QS
Inventory ownership
Homestead Crafts, a distributor of handmade gifts, operates out of owner Emma Finn’s house. At the end of the current period., Emma looks over
her inventory and finds that she has:
- 1,300 units (products) in her basement, 20 of which were damaged by water and cannot be sold.
- 350 units in her van, ready to deliver per a customer order, terms FOB destination.
- 80 units out on consignment to a friend who owns a retail store.
How many units should Emma include in her company’s period-end inventory?
Expert Solution & Answer
To determine
Introduction:
FOB destination:
FOB destination stands for Free On Board destination. It is a term for selling the merchandise, under which the delivery of goods is completed when the goods are reached at buyer's destination. The goods in transit belong to the seller and seller bears the cost of transportation till the buyer's destination. In case of FOB destination, the goods in transit should be included in the seller inventory.
Consignment:
Consignment is a process of selling merchandise, where the seller sends goods to its agent for sale. In this process, the seller is called the consignor and the agent selling the goods on behalf of the seller is called the consignee. The unsold merchandises on consignment are included in the inventory of the consignor and not the consignee.
To Calculate:
The number of units in the period end inventory
Answer to Problem 1QS
Solution:
The number of units in the period end inventory should be 1,710 units
Explanation of Solution
The numbers of units in the period end inventory are calculated as follows:
Note:
- In case of GOF destination terms, the goods in transit belong to the seller, hence 350 units are added in the ending inventory.
- The unsold merchandises on consignment are included in the inventory of the consignor; hence 80 units are added in the ending inventory.
Conclusion
Hence, it can be concluded that the number of units in the period end inventory should be 1,710 units
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Mrs. Clean Cleaning has decided that, in addition to providing cleaning services, it will sell cleaning products. Mrs. Clean uses the perpetual inventory system. During December 2018, Mrs. Clean completed the transactions found in the second picture. Complete the journal entries found in the first picture using the transaction information in the second picture.
Muller Computers stores its inventory in a warehouse that burned to the
ground in late November, 2018. Their sales office was at a different location.
In order to file a claim with their insurance, the owners ask you to estimate the
inventory that was in the warehouse. The following information is available:
Beginning inventory
Purchases through November 30
Net sales revenue through November 30
$375,500
470,250
793,000
The company's gross profit has historically been 40% of net sales revenue.
Estimate the value of the inventory destroyed in the fire using the gross profit
method.
a. $388,450
b. $410,000
c. $369,950
d. $528,550
Muller Computers stores its inventory in a warehouse that burned to the ground in late November, 2018. Their sales office was at a different location. In order to file a claim with their insurance, the owners ask you to estimate the inventory that was in the warehouse. The following information is available:
Beginning Inventory
375,000
Purchases through November 30
470,250
Net sales revenue through november 30
793,000
The company's gross profit has historically been 40% of net sales revenue. Estimate the value of the inventory destroyed in the fire using the gross profit method.
a.$528,550
b.$388,450
c.$369,950
d.$410,000
Chapter 6 Solutions
FUND.ACCT.PRIN.-CONNECT ACCESS
Ch. 6 - Inventory ownership Homestead Crafts, a...Ch. 6 - QS 6-2 Inventory costs C2
A car dealer acquires a...Ch. 6 - Prob. 3QSCh. 6 - Prob. 4QSCh. 6 - Perpetual: Inventory costing with FIFO P1 A...Ch. 6 - Perpetual: Inventory costing with LIFO Refer to...Ch. 6 - Perpetual Inventory costing with weighted average...Ch. 6 - Periodic: Inventory costing with FIFO P3 Refer to...Ch. 6 - Periodic: Inventory costing with LIFO Refer to the...Ch. 6 - Periodic: Inventory costing with weighted average...
Ch. 6 - Perpetual: Assigning costs with FIFO Trey Monson...Ch. 6 - QS6-11
Perpetual Inventory costing with LIFO
Refer...Ch. 6 - QS 6-12
Perpetual: Inventory costing with weighted...Ch. 6 - QS6.13
Perpetual Inventory costing with specific...Ch. 6 - Periodic: Inventory costing with FIFO P3 Refer to...Ch. 6 - Periodic Inventory costing with LIFO P3 Refer to...Ch. 6 - Periodic: Inventory costing with weighted average...Ch. 6 - Periodic: Inventory costing with specific...Ch. 6 - QS 6-18 Contrasting inventory costing methods...Ch. 6 - Inventory errors A2 In taking a physical inventory...Ch. 6 - Prob. 21QSCh. 6 - Prob. 22QSCh. 6 - Prob. 23QSCh. 6 - Prob. 24QSCh. 6 - Prob. 25QSCh. 6 - Prob. 26QSCh. 6 - Exercise 6-1 Inventory ownership C1
1. At...Ch. 6 - Exercise 6-2
Inventory costs
C2
Walberg...Ch. 6 - Exercise 6-3 Perpetual Inventory costing methods...Ch. 6 - Prob. 4ECh. 6 - Prob. 5ECh. 6 - Exercise 6-5A Periodic: Inventory costing P3 Refer...Ch. 6 - Prob. 7ECh. 6 - Exercise 6-7 Perpetual Inventory costing...Ch. 6 - Exercise 6.8 Specific identification Refer to the...Ch. 6 - Prob. 10ECh. 6 - Prob. 11ECh. 6 - Prob. 12ECh. 6 - Prob. 13ECh. 6 - Prob. 14ECh. 6 - Prob. 15ECh. 6 - Prob. 16ECh. 6 - Prob. 17ECh. 6 - Prob. 18ECh. 6 - Prob. 19ECh. 6 - Prob. 20ECh. 6 - Prob. 21ECh. 6 - Problem 6-1A
Perpetual: Alternative cost...Ch. 6 - Prob. 2PSACh. 6 - Prob. 3PSACh. 6 - Prob. 4PSACh. 6 - Problem 6-5A Lower of cost or market P2 A physical...Ch. 6 - Prob. 6PSACh. 6 - Prob. 7PSACh. 6 - Prob. 8PSACh. 6 - Prob. 9PSACh. 6 - Prob. 10PSACh. 6 - Prob. 1PSBCh. 6 - Prob. 2PSBCh. 6 - Prob. 3PSBCh. 6 - Prob. 4PSBCh. 6 - Prob. 5PSBCh. 6 - Prob. 6PSBCh. 6 - Prob. 7PSBCh. 6 - Prob. 8PSBCh. 6 - Prob. 9PSBCh. 6 - Prob. 10PSBCh. 6 - Prob. 6.1SPCh. 6 - Prob. 6.2SPCh. 6 - AA 6-1 Use Apple's financial statements in...Ch. 6 - AA 6-2 Comparative figures for Apple and Google...Ch. 6 - Prob. 3AACh. 6 - Prob. 1DQCh. 6 - Where is the amount of merchandise inventory...Ch. 6 - If costs are declining, will the LIFO or FIFO...Ch. 6 - Prob. 4DQCh. 6 - Prob. 5DQCh. 6 - Prob. 6DQCh. 6 - Prob. 7DQCh. 6 - Prob. 8DQCh. 6 - BTN 6-3 Golf Challenge Corp. is a retail sports...Ch. 6 - Prob. 2BTNCh. 6 - Prob. 3BTNCh. 6 - Prob. 4BTNCh. 6 - Prob. 5BTN
Knowledge Booster
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
- Recording Purchases Compass Inc. purchased 1,250 bags of insulation from Glassco Corp. The bags of insulation cost $5.50 each. Compass paid Tremblay Trucking $320 to have the bags of insulation shipped to its warehouse. Compass returned 50 bags that were defective and paid for the remainder. Assume that Compass uses the perpetual inventory system and that Glassco did not offer a purchase discount. (Note: You are doing the accounting for Compass Inc.) Required: 1. Prepare the journal entry to record the purchase of the bags of insulation. 2. Prepare the entry to record the payment for shipping. 3. Prepare the entry for the return of the defective bags. 4. Prepare the entry to record the payment for the bags kept by Compass. 5. What is the total cost of this purchase?arrow_forward2. Cedarbrae Art Sales uses the perpetual inventory system. On September 30, 2014, the company's year-end, a physical count was taken of the inventory on hand. The cost of the inventory on hand was determined to be $412500. However, the accountant has questions about the following items: 1. On the store shelves, the staff counted 7 paintings held by Cedarbrae on consignment from a local artist. The paintings are included on the inventory count at a cost of $4,200. On September 30, a shipment of goods was sent to a customer FOB destination. The cost of the goods shipped is $7,800, and freight, which is to be paid by Cedarbrae, will cost $200. These items are not included in the inventory count. 2. On October 2, a freight company delivered goods that cost $10,000 to Cedarbrae's warehouse. The goods had been shipped by the vendor on September 29, FOB shipping point. Freight on this shipment will amount to $500 and will be paid by the appropriate party. The goods are not included on the…arrow_forwardAt the end of the current period, a company checks its physical inventory against its records and discovers the following. . 1,700 units (products) were in the warehouse. . 23 of the 1,700 units in the warehouse were destroyed when a storage shelf collapsed. . 180 units were loaded in a trailer. The units are to be delivered to a customer, terms FOB destination. • 140 units were out on consignment to a retailer. Determine the number of units in the company's period-end inventory. Units in Ending Inventory Units of Product in warehouse: Add: Less: Total units in period-end inventory 1,700 units unitsarrow_forward
- Quiz Sandoval needs to determine its year-end inventory. The warehouse contains 22,000 units, of which 3,200 were damaged by flood and are not sellable. Another 2,200 units were purchased from Markor Company, FOB shipping point, and are currently in transit. The company also consigns goods and has 4,200 units at a consignee's location. How many units should Sandoval include in its year-end inventory? Multiple Choice 23,000 31,600 20,800 25,200 28,400arrow_forwardRequired: calculate the estimated loss on the inventoryarrow_forwardQUESTION: ON NOVEMBER 21, 2016, A FIRE AT HODGE COMPANY'S WAREHOUSE CAUSED SEVERE DAMAGE TO ITS ENTIRE INVENTORY OF PRODUCT TEX. HODGE ESTIMATES THAT ALL USABLE DAMAGED GOODS CAN BE SOLD FOR $17,000. THE FOLLOWING INFORMATION WAS AVAILABLE FROM THE RECORDS OF HODGE'S PERIODIC INVENTORY SYSTEM: INVENTORY, NOVEMBER 1 $ 125,000 NET PURCHASES FROM NOVEMBER 1, TO THE DATE OF THE FIRE 145,000 NET SALES FROM NOVEMBER 1, TO THE DATE OF THE FIRE 225,000 BASED ON RECENT HISTORY, HODGE'S GROSS PROFIT RATIO ON PRODUCT TEX IS 40% OF NET SALES. REQUIRED: CALCULATE THE ESTIMATED LOSS ON THE INVENTORY FROM THE FIRE, USING THE GROSS PROFIT METHOD.arrow_forward
- Required information [The following information applies to the questions displayed below.] Suppose that David has elected to account for inventories and has adopted the last-in, first-out (LIFO) inventory-flow method for his business inventory of widgets (purchase prices below). Widget Number 1 Number 2 Number 3 Widget Number 4 Number 5 Number 6 Purchase Date August 15 October 30 November 10 Cost of goods sold In late December, David sold one widget, and next year David expects to purchase three more widgets at the following estimated prices: Ending inventory Purchase Date Early spring Summer Fall Direct Cost $ 2,100 2,200 2,300 Other Costs $ 100 150 100 LIFO a. What cost of goods sold and ending inventory would David record if he elects to use the LIFO method this year? Total Cost $2,200 2,350 2,400 Estimated Cost $2,600 2,260 2,400arrow_forwardHw.29.arrow_forwardA local manufacturer, who deals with gasolene products, maintains his inventory record using weighted average method. Assuming that the prices would go up, he purchased gasolene on different dates and stored it, to be sold for a higher price. Below are the transactions that were recorded by him in the month September 2022. 02-Sep Purchased 1,200 ltrs. @1.15 pre ltr. 05-Sep Purchased 1,000 ltrs. @1.20 per ltr. 08-Sep Purchased 1,500 ltrs. @1.15 per ltr. 13-Sep Issued 2,000 ltrs. to production 19-Sep Purchased 1,200 ltrs. @1.25 per ltr. 22-Sep purchases 1,000 ltrs. @1.30 per Itr 25-Sep Issued 2,000 Itrs. To production 28-Sep Purchased 800 Itrs. @1.40 per ltr. 30-Sep Purchased 1,000 ltrs. @1.50 per ltr. Please find the value of his closing inventory and value of the issues using weighted average method.arrow_forward
- On Feb. 18, 2020, a fire destroyed the merchandise inventory of Cristina Santiago Shin The following information was available from the entity's accounting office: Cost of Goods Sold Transportation In Merchandise Inventory, 1/1/2020 P1,260,000 39,600 300,000 26,400 46,200 1,320,000 Purchases Discounts Purchases Returns and Allowances Purchases Required: Compute the value of the lost merchandise.arrow_forwardConsider the information below for Jack's Fantastic Chairs company, for the month of January 2020. January 1st Beginning Inventory 0 Chairs in shop January 10th Purchased in Inventory 250 Chairs @ $13 cost each January 12th Purchased in Inventory 50 Chairs @ $15 cost each January 17th Purchased in Inventory 72 Chairs @ $20 cost each Jack uses the Periodic System to keep track of his Inventory. On January 31st, Jack counts his ending Inventory. He has 35 Chairs unsold (still in his shop). Therefore, the value of his Ending Inventory for the month for January, assuming Average Costing, is: Select one: O a. $512 O b. $490 O c. $500 O d. $497arrow_forwardOn November 21, 2024, a fire at Hodge Company's warehouse caused severe damage to its entire inventory of Product Tex. Hodge estimates that all usable damaged goods can be sold for $15,000. The following information was available from the records of Hodge's periodic inventory system: Inventory, November 1, 2024 Net purchases from November 1, to the date of the fire Net sales from November 1, to the date of the fire Based on recent history, Hodge's gross profit ratio on Product Tex is 40% of net sales. $ 115,000 143,000 223,000 Required: Calculate the estimated loss on the inventory from the fire, using the gross profit method. Estimated loss from firearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
INVENTORY & COST OF GOODS SOLD; Author: Accounting Stuff;https://www.youtube.com/watch?v=OB6RDzqvNbk;License: Standard Youtube License