Exercise 8-2 In your audit of Leon Company, you find that a physical inventory o

Question

Exercise 8-2 In your audit of Leon Company, you find that a physical inventory on December 31, 2017, showed merchandise with a cost of $439,040 was on hand at that date. You also discover the following items were all excluded from the $439,040 1. Merchandise of $65,460 which is held by Leon on consignment. The consignor is the Max Suzuki Company 2. Merchandise costing $41,570 which was shipped by Leon f.o.b. destination to a customer on December 31, 2017. The customer was expected to receive the merchandise on January 6, 2018 3. Merchandise costing $42,550 which was shipped by Leon f.o.b. shipping point to a customer on December 29, 2017. The customer was scheduled to receive the merchandise on January 2, 2018. 4. Merchandise costing $90,020 shipped by a vendor f.o.b. destination on December 30, 2017, and received by Leon on January 4, 2018. 5. Merchandise costing $51,320 shipped by a vendor f.o.b. shipping point on December 31, 2017, and received by Leon on January 5, 2018 Based on the above information, calculate the amount that should appear on Leon's balance sheet at December 31, 2017, for inventory. Inventory as on December 31, 2017

Explanation / Answer

Statement Showing Inventory Balance Detail Amount Amount Remark Stock of Inventory as on date 31/12/2017 $439,040.00 Other detail Merchandised held by Leon on Consignement $65,460.00 Nil Due to Cosnsignment was on held , not considered in Inventory Merchandised shipped on FOB destination Basis, aexpected to arrived on 06Jan2018 $41,570.00 Nil Shipped on FOB dstination basis means ownership transferred, when goods reached at destination and expected to reched by 06 Jan 2018. Hence it will not be included. Merchandised shipped on FOB Shipping point on 29 Dec 2017, aexpected to arrived on 02 Jan2018 $42,550.00 $42,550.00 Shipped on FOB Shipping basis means ownership transferred after shipping of the good and shipping made on 29 Dec 2017 . Hence it will be included. Merchandised shipped on FOB destination Basis, arrived on 04 Jan2018 $90,020.00 Nil Shipped on FOB dstination basis means ownership transferred, when goods reached at destination and expected to reched by 04 Jan 2018. Hence it will not be included. Merchandised shipped on FOB Shipping point on 31 Dec 2017 , aexpected to arrived on 05 Jan2018 $51,320.00 $51,320.00 Shipped on FOB Shipping basis means ownership transferred after shipping of the good and shiiping made on 31st Dec 17. Hence it will be included. Inventory as on Dec 31 2017 will be $532,910.00

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