QS 5-10 Inventory ownership L.O. C1 Crafts Galore, a distributor of handmade gif

Question

QS 5-10 Inventory ownership L.O. C1

Crafts Galore, a distributor of handmade gifts, operates out of owner Jenny Finn's house. At the end of the current period, Jenny reports she has 1,500 units (products) in her basement, 30 of which were damaged by water and cannot be sold. She also has another 250 units in her van, ready to deliver per a customer order, terms FOB destination, and another 70 units out on consignment to a friend who owns a retail store. How many units should Jenny include in her company's period-end inventory?

Crafts Galore, a distributor of handmade gifts, operates out of owner Jenny Finn's house. At the end of the current period, Jenny reports she has 1,500 units (products) in her basement, 30 of which were damaged by water and cannot be sold. She also has another 250 units in her van, ready to deliver per a customer order, terms FOB destination, and another 70 units out on consignment to a friend who owns a retail store. How many units should Jenny include in her company's period-end inventory?

Explanation / Answer

= (1500-30) + 250 = 1720 units When goods are on consignment the onwership is transferred. Also, inventory that cannot be sold is written off. You still count the units in the van, because they are yet to be delivered (no transfer of legal ownership yet).

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