I\'m not to sure on how I would do this problem A Explanation is necessary to ge

Question

I'm not to sure on how I would do this problem A Explanation is necessary to get all the points along with the correct answer.

Given the following items and costs as of the balance sheet date, determine the value of Alfred Company's merchandise inventory.

1. $1,300 goods sold by Alfred to another company. The goods are in transit and shipping terms are FOB destination.
2. $1,900 goods sold by another company to Alfred. The goods are in transit and shipping terms are FOB destination.
3. $2,000 owned by Alfred but in the possession of another company, the consignee.
4. Damaged goods owned by Alfred which originally cost $3,400 but which now have a $400 net realizable value.

Explanation / Answer

Hi,

Please find the answer as follows:

Cost of Merchandise Inventory = 1300 + 2000 + 400 = 3700 (Option A is correct)

$ 1900 will not be included because the goods have not recived by Alfred Company.

Thanks.

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