Exercise 8-6 Goods in transit [LO8-2] The Kwok Company\'s inventory balance on D

Question

Exercise 8-6 Goods in transit [LO8-2]

The Kwok Company's inventory balance on December 31, 2013, was $195,000 (based on a 12/31/13 physical count) before considering the following transactions:

Goods shipped to Kwok f.o.b. destination on December 20, 2013, were received on January 4, 2014. The invoice cost was $36,000.

Goods shipped to Kwok f.o.b. shipping point on December 28, 2013, were received on January 5, 2014. The invoice cost was $23,000.

Goods shipped from Kwok to a customer f.o.b. destination on December 27, 2013, were received by the customer on January 3, 2014. The sales price was $46,000 and the merchandise cost $28,000.

Goods shipped from Kwok to a customer f.o.b. destination on December 26, 2013, were received by the customer on December 30, 2013. The sales price was $26,000 and the merchandise cost $19,000.

Goods shipped from Kwok to a customer f.o.b. shipping point on December 28, 2013, were received by the customer on January 4, 2014. The sales price was $31,000 and the merchandise cost $18,000.

The Kwok Company's inventory balance on December 31, 2013, was $195,000 (based on a 12/31/13 physical count) before considering the following transactions:

Explanation / Answer

195,000 physical count +23,000 (2. FOB shipping to Kwok is in Kwok’s inventory at shipping point) +28,000 (3. FOB destination from Kwok is in Kwok’s inventory until destination) = 246,000 (1, 4 and 5 are not in Kwok’s inventory) Answer: $246,000

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