Chapter 8, Problem 8.7E

To determine

Transportation Costs:

The costs of delivering the merchandise inventory from the manufacturer to the buyer are termed as transportation cost and are differentiated on the basis of terms of the payment of transportation charges or freight by the buyer or the seller.

FOB Shipping point means that the buyer pays all costs incurred for the delivery of goods once the goods is left from the supplier’s warehouse.

FOB Destination means that the buyer pays all costs incurred for the delivery of goods once the goods is delivered at buyer receiving point.

To Determine: The correct inventory amount to be reported in Company R’s 2016 balance sheet.