Chapter 6, Problem 6.1BP

To determine

Physical inventory is the actual inventory which are counted tangibly. Normally, at the end of each accounting period, company takes the count of the physical inventory. It contains the details of the inventories like, actual count, weight, volume, and measures for all type of inventories.

FOB (Free on Board) Shipping point means that the buyer pays all costs incurred for the delivery of goods from the supplier’s warehouse to the destination point. So, the title of ownership is held with the buyer, from the shipping point itself.

FOB Destination means that the seller pays all costs incurred for the delivery of goods from the supplier’s warehouse to the destination point. So, the title of ownership would be held with the buyer only at the destination point.

To identify: Whether the following item should be included or excluded in Company S’s ending inventory.