INTERMEDIATE ractice Gradebook ORION Downloadable eTextbook ACCO gnment CALCULAT

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INTERMEDIATE ractice Gradebook ORION Downloadable eTextbook ACCO gnment CALCULATOR HESSAGEN?NSTRUCTOR ,ULL SCREEN. Exercise 8-1 Presented below is a list of items that may or may not be Indicate which of these items would typically be reported reported as inventory in a company's December 31 balance sheet. as inventory in the financial statements. If an item should not be reported as inventory, indicate how it should be reported in the financial statements financial statements. If an Item in Financial Statement Financial Statement 1. Goods out on consignment at another company's store 2. Goods sold on an installment basis (bad debts can be reasonably estimated) 3. Goods purchased f.o.b. shipping point that are in transit at December 31. 4. Goods purchased f.?.b, destination that are in transit at December 31 5. Goods sold to another company, for which our company has signed an agreament to repurchase at a set price that covers all costs related to tha inventory, 6. Goods sold where large returns are predictable 7. Goods sold r.?.b. shipping point that are in transit at December 31, 8. Freight charges on goods purchased. All Rights Reserved. A Division of

Explanation / Answer

Solution:

Explanation: Inventory is company's asset and its ending balance must be reported as a current asset on a balance sheet of the company. It is not an income statement account. but any change in Inventory is a component in the computation of the Cost of Goods Sold

Item in Financial Statement Financial Statement No. 1 Inventory Balance sheet 2 Cost of good sold Income statement 3 Inventory Balance sheet 4 Not reported Not reported 5 Inventory Balance sheet 6 Cost of good sold Income statement 7 Cost of good sold Income statement 8 Inventory Balance sheet 9 Interest expense Income statement 10 Advertising expense Income statement 11 Inventory Balance sheet 12 Office supplies Balance sheet 13 Inventory Balance sheet 14 Inventory Balance sheet 15 Not reported Not reported 16 Inventory Balance sheet 17 Inventory Balance sheet 18 Short term investment Balance sheet

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