Inventory: It refers to the total stock of such goods or items which are held by the business organizations with the purpose of sale. Consigned goods: Consigned goods are those goods which are given further to agents to perform the function of sale. The risk and ownership of the consigned goods always remain in the hands of the company which is the consignor of those goods, till goods are unsold. Free on board (FOB): It refers to the term of sales, which states who will be liable for the risk related to the damage of goods in transit. This liability can be of seller or buyer, depends upon the condition. The types of free board are: Free on board (FOB) shipping point Free on board (FOB) destination FOB shipping point: In free on board (FOB) shipping point, ownership of goods transferred from seller to buyer with the transfer of goods to the goods carrier. FOB destination: In free on board (FOB) destination, the ownership and risk related to goods to be sold will remain with the seller till the date on which consignment will be actually received by the buyer. To determine: The correct amount of inventory of W Company on December 31.

Question

Want to see the full answer?

Answer 1

Question

Chapter 6, Problem 2E

To determine

Inventory: It refers to the total stock of such goods or items which are held by the business organizations with the purpose of sale.

Consigned goods: Consigned goods are those goods which are given further to agents to perform the function of sale. The risk and ownership of the consigned goods always remain in the hands of the company which is the consignor of those goods, till goods are unsold.

Free on board (FOB): It refers to the term of sales, which states who will be liable for the risk related to the damage of goods in transit. This liability can be of seller or buyer, depends upon the condition.

The types of free board are:

Free on board (FOB) shipping point

Free on board (FOB) destination

FOB shipping point: In free on board (FOB) shipping point, ownership of goods transferred from seller to buyer with the transfer of goods to the goods carrier.

FOB destination: In free on board (FOB) destination, the ownership and risk related to goods to be sold will remain with the seller till the date on which consignment will be actually received by the buyer.

To determine: The correct amount of inventory of W Company on December 31.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Please provide the solution to this general accounting question with accurate financial calculations.

An asset owned by Shahidi Technologies has a book value of $36,750 on June 30, Year 5. The asset has been depreciated at an annual rate of $8,200 using the straight-line method. Assuming the asset is sold on June 30, Year 5 for $41,500, how should the company record the transaction? a. Neither a gain nor a loss is recognized on this type of transaction. b. A gain on sale of $4,750. c. A gain on sale of $4,000. d. A loss on sale of $4,750. e. A loss on sale of $4,000.

I am looking for help with this financial accounting question using proper accounting standards.