Dobbs Wholesale Antiques makes all sales under terms of FOB shipping point. The

Question

Dobbs Wholesale Antiques makes all sales under terms of FOB shipping point. The company usually ships inventory to customers approximately one week after receiving the order. For orders received late in December, Kathy Dobbs, the owner, decides when to ship the goods. If profits are already at an acceptable level, Dobbs delays shipment until January. If profits for the current year are lagging behind expectations, Dobbs ships the goods during December. Under Dobbs’ FOB policy, when should the company record a sale? Do you approve or disapprove of Dobbs’ manner of deciding when to ship goods to customers and record the sales revenue? If you approve, give your reason. If you disapprove, give your reason and identify a better way to decide when to ship goods.

Explanation / Answer

Under Dobbs' FOB policy, he company should record the sale when the goods leave the supplier's shipping dock.

Dobb delays the shipping of the goods if the profits are at acceptable level. However, this method is unethical & I disapprove of the same since delaying delivery will lead to customer dissatisfaction & will alos affect the relationship with the customer in an adverse way. Dobb should maintain the standards of his bsuiness and not resort to unethical ways to adjust his profits.

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