Question

Sheridan Company took a physical inventory on December 31 and determined that goods costing $222,000 were on hand. Not included in the physical count were $35,000 of goods purchased from Windsor, Inc., FOB, shipping point, and $21,000 of goods sold to Bonita Industries for $32,000, FOB destination. Both the Windsor purchase and the Bonita sale were in transit at year-end.What amount should Sheridan report as its December 31 inventory?

Answer 1

Answer:

$278,000

Explanation:

On December 31,

Goods costing = $222,000

Physical count = $35,000

Amount should Sheridan report as its December 31 inventory:

= Inventory in hand as per physical count + Goods purchased from Windsor, Inc. under FOB basis + Cost of goods sold to Bonita Industries under FOB destination

= $222,000 + $35,000 + $21,000

= $278,000