Problem 6-1A Austin Limited is trying to determine the value of its ending inven
ID: 2600018 • Letter: P
Question
Problem 6-1A
Austin Limited is trying to determine the value of its ending inventory as of February 28, 2015, the company’s year-end. The following transactions occurred, and the accountant asked your help in determining whether they should be recorded or not.
For each of the transactions below, specify whether the item in question should be included in ending inventory, and if so, at what amount.
IncludedNot Included
$ (b) On February 26, Louis Inc. shipped goods to Austin under terms FOB shipping point. The invoice price was $450 plus $30 for freight. The receiving report indicates that the goods were received by Austin on March 2.IncludedNot Included
$ (c) Austin had $650 of inventory isolated in the warehouse. The inventory is designated for a customer who has requested that the goods be shipped on March 10.IncludedNot Included
$ (d) Also included in Austin’s warehouse is $700 of inventory that Ryhn Producers shipped to Austin on consignment.IncludedNot Included
$ (e) On February 26, Austin issued a purchase order to acquire goods costing $900. The goods were shipped with terms FOB destination on February 27. Austin received the goods on March 2.IncludedNot Included
$ (f) On February 26, Austin shipped goods to a customer under terms FOB destination. The invoice price was $350; the cost of the items was $200. The receiving report indicates that the goods were received by the customer on March 2.IncludedNot Included
$Explanation / Answer
FOB shipping point means thath the title to the goods pass to buyer as soon as the goods are received at shipping dock whereas as under FOB destination the title to the goods passes to the buyer only when it is received at the the buyers dock a no 0 b yes 480 c yes 650 d no 0 e no 0 f yes 200