At December 31, 2017 Howell Company's Inventory Records Indicated a Balance

question 159

Multiple Choice

At December 31, 2017 Howell Company's inventory records indicated a balance of $878,000. Upon further investigation it was determined that this amount included the following:
-$168,000 in inventory purchases made by Howell shipped from the seller 12/27/17 terms FOB destination, but not due to be received until January 2nd
-$111,000 in goods sold by Howell with terms FOB destination on December 27^th. The goods are not expected to reach their destination until January 6^th.
-$9,000 of goods received on consignment from Westwood Company
What is Howell's correct ending inventory balance at December 31, 2017?

• A)$710,000
• B)$869,000
• C)$590,000
• D)$701,000

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Definitions:

Balance Sheet

An accounting statement that captures the financial standing of a corporation by itemizing assets, obligations, and shareholders' capital at a certain time.

Available-For-Sale Debt Investments

Debt securities not classified as held-to-maturity or trading securities, carried at fair value, with unrealized gains or losses reported in other comprehensive income.

Trading Debt Investments

Debt securities bought and sold with the intention of profiting from short-term price fluctuations, recorded as current assets.

Unrealized Holding Gain/Loss

Gains or losses on investments that have not yet been sold, and thus the gain or loss has not been "realized."