Chapter 6, Problem 1QS

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