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, 2018, was $195,000 (based on a 12/31/18 physical count) before considering the following transactions: 1. Goods shipped to Kwok fo.b. destination on December 20, 2018, were received on January 4, 2019. The invoice cost was $36,000 2. Goods shipped to Kwok fo.b. shipping point on December 28, 2018, were received on January 5, 2019. The invoice cost was 3. Goods shipped from Kwok to a customer fo.b. destination on December 27, 2018, were received by the customer on January 3 4. Goods shipped from Kwok to a customer fo.b. destination on December 26, 2018, were received by the customer on December 30, 5. Goods shipped from Kwok to a customer fo.b. shipping point on December 28, 2018, were received by the customer on January 4, $23,000. 2019. The sales price was $46,000 and the merchandise cost $28,000. 2018. The sales price was $26,000 and the merchandise cost $19,000. 2019. The sales price was $31,000 and the merchandise cost $18,000 Required: Determine the correct inventory amount to be reported in Kwok's 2018 balance sheet.

Explanation / Answer

Inventory before adjustment 195000 1 Inventory will be included in sellers inventory until it reaches buyer destination which is 4 jan 2019 in case of FOB destination 0 2 Included in buyers inventory in case of FOB shipping 23000 3 Included in sellers inventory 28000 4 included in buyers inventory since reached before 31/12 (19000) 5 included in buyer inventory (18000) correct Inventory balance 209000

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