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

Question

Exercise 8-2

In your audit of Alan Company, you find that a physical inventory on December 31, 2017, showed merchandise with a cost of $400,350 was on hand at that date. You also discover the following items were all excluded from the $400,350.

Based on the above information, calculate the amount that should appear on Alan’s balance sheet at December 31, 2017, for inventory.

1. Merchandise of $63,540 which is held by Alan on consignment. The consignor is the Max Suzuki Company. 2. Merchandise costing $39,530 which was shipped by Alan 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 $43,150 which was shipped by Alan 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 $90,100 shipped by a vendor f.o.b. destination on December 30, 2017, and received by Alan on January 4, 2018. 5. Merchandise costing $50,500 shipped by a vendor f.o.b. shipping point on December 31, 2017, and received by Alan on January 5, 2018.

Explanation / Answer

Inventory balance 400350 1 0 2 39530 3 0 4 0 5 50500 Inventory as on December 31, 2017 490380

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