From Financial & Managerial Accounting, 13th ed; Exercise 8.5:
Jensen Tire had 2 large shipments in transit at Dec. 31. One was a $125,000 inbound shipment of merchandise (shipped Dec. 28, F.O.B. shipping point). which arrived at Jensen’s receiving dock Jan. 2. The other shiopment was a $95,000 outbound shipment of merchandise to a customer, which was shipped and billed by Jensen Dec. 30 (terms F.O.B. shipping point) and reached the customer Jan. 8.
In taking a physical inventory on Dec. 31, Jensen counted all goods on hand and priced the inventory on the basis of average cost. The total amount was $600,000. No goods in transit were included in this figure.
What amount should appear as inventory on the company’s balance sheet at Dec. 31? Explain. If you indicate an amount other than $600,000, state which asset or liability other than inventory also would be changed in amount.
Would greatly appreciate some help. TX!!
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