Bridgeport Company’s inventory of $1,099,800 at December 31, 2017, was based on

Question

Bridgeport Company’s inventory of $1,099,800 at December 31, 2017, was based on a physical count of goods priced at cost and before any year-end adjustments relating to the following items.

What amount should Bridgeport report as inventory on its balance sheet?

(a) Goods shipped from a vendor f.o.b. shipping point on December 24, 2017, at an invoice cost of $65,710 to Bridgeport Company were received on January 4, 2018. (b) The physical count included $28,670 of goods billed to Sakic Corp. f.o.b. shipping point on December 31, 2017. The carrier picked up these goods on January 3, 2018.

Explanation / Answer

Inventory to be reported: $1,165,510.

The inventory to be reported will include the goods shipped from vendor F.O.B. shipping point $65,710 since the title to the goods has already passed to Bridgeport on December 24, 2017 when the goods were shipped. However, goods billed F.O.B. shipping point $28,670 which are picked up by the carrier on January 3, 2018 will continue to be reported as inventory on December 31, 2017 since the title to the goods will pass to the buyer Sakic Corp. only when the goods leave Bridgeport’s shipping dock. Thus, inventory to be reported = $1,099,800 + $65,710 = $1,165,510.

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