F.O.B (Free On Board) Shipping Point: Under this system, the responsibility of the seller over the goods ends once the goods are out of the warehouse. The buyer takes the responsibility of the delivery of the goods to his/her location. The legal title of the goods is transferred from the seller to the buyer, once the goods are out of the seller’s warehouse, regardless to the goods reached at buyer’s location. F.O.B Destination Point: Under this system, the seller is responsible for the transfer of the goods from the warehouse to the customer’s destination. The legal title of the goods is transferred from the seller to the buyer, once the goods are delivered at the buyer’s place. To find: the shipments that should be included in K’s December 31 inventory.

Question

Problem #2 Effect of Freight Terms to Inventory Transactions: 1. Jesus Armenta Supplies shipped merchandise to Lily Custodio Sales on Dec. 28, 2009, terms FOB destination. The merchandise arrives at Lily Custodio's on Jan. 4, 2010. 2. Divina Quezada shipped merchandise to Nancy Mulles on Dec. 25, 2009, FOB destination. Nancy Mulles received the merchandise on Dec. 31, 2009. 3. Lamberto Reyes Bros. shipped merchandise to Liwayway Ables Company on Dec. 27, 2009, FOB shipping point. Liwayway Ables Company received the merchandise on Jan. 3, 2010. 4. Felinita Barroga Company shipped merchandise to Nanette Virtudazo on Dec. 24, 2009, FOB shipping point. The merchandise arrived at Nanette Virtudazo's on Dec. 29, 2009. Required: For each of the above transactions, indicate which company should include the inventory on its Dec. 31, 2009 balance sheet:

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Chapter 8, Problem 8.3BE

To determine

F.O.B (Free On Board) Shipping Point: Under this system, the responsibility of the seller over the goods ends once the goods are out of the warehouse. The buyer takes the responsibility of the delivery of the goods to his/her location. The legal title of the goods is transferred from the seller to the buyer, once the goods are out of the seller’s warehouse, regardless to the goods reached at buyer’s location.

F.O.B Destination Point: Under this system, the seller is responsible for the transfer of the goods from the warehouse to the customer’s destination. The legal title of the goods is transferred from the seller to the buyer, once the goods are delivered at the buyer’s place.

To find: the shipments that should be included in K’s December 31 inventory.

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Problem #2 Effect of Freight Terms to Inventory Transactions: 1. Jesus Armenta Supplies shipped merchandise to Lily Custodio Sales on Dec. 28, 2009, terms FOB destination. The merchandise arrives at Lily Custodio's on Jan. 4, 2010. 2. Divina Quezada shipped merchandise to Nancy Mulles on Dec. 25, 2009, FOB destination. Nancy Mulles received the merchandise on Dec. 31, 2009. 3. Lamberto Reyes Bros. shipped merchandise to Liwayway Ables Company on Dec. 27, 2009, FOB shipping point. Liwayway Ables Company received the merchandise on Jan. 3, 2010. 4. Felinita Barroga Company shipped merchandise to Nanette Virtudazo on Dec. 24, 2009, FOB shipping point. The merchandise arrived at Nanette Virtudazo's on Dec. 29, 2009. Required: For each of the above transactions, indicate which company should include the inventory on its Dec. 31, 2009 balance sheet:

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