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Financial Accounting

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Inventory Cost: Goods on Consignment and Goods in Transit

FINACT-GEZGE9

Maple Leaf Box Company is preparing its Balance Sheet at year-end. After counting its Inventory on December 31st, the company finds that Inventory costing \$2,140,000 is stored in the warehouse. However, the amount reported on the Balance Sheet may need to be adjusted for various items listed below:

  • Inventory purchased for \$39,000 was in transit from a vendor. The goods were shipped “FOB Shipping” on December 28th, but had not been received by Maple on December 31st.
  • Inventory with a cost of \$19,000 was in the warehouse on consignment from Red Brick Company. Those who counted the inventory were unaware of the fact that these items were on consignment from another company.
  • Inventory costing \$15,500 had been shipped to a customer “FOB Shipping” on December 30th, but the shipment had not yet been received by them on December 31st.
  • Inventory with a cost of \$36,400 was shipped to a customer “FOB Destination” on December 29th and the shipment was received by them on December 31st.

After taking into consideration the items above, at what amount should Inventory be reported on the year-end Balance Sheet for Maple Leaf Box Company?

A

\$2,140,000

B

\$2,160,000

C

\$2,121,000

D

\$2,191,900