For Each of the Following, Calculate the Cost of Inventory

question 150

Short Answer

For each of the following, calculate the cost of inventory reported on the balance sheet.
(a)The total merchandise on hand at the end of the year is $62,000. Of the $62,000, $8,000 has been sold FOB destination and is awaiting pickup by the carrier.
(b)The total merchandise inventory at the end of the year was $63,000. Excluded from the amount were purchases of $6,000 in transit under FOB shipping point terms.
(c)The total merchandise inventory at the end of the year was $75,000. Excluded from the amount were purchases of $5,000 in transit under FOB destination terms.

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Definitions:

Forecasting

The process of making predictions about future events or trends, based on analysis of historical data and current information.

Cognitive Dissonance

A psychological phenomenon experienced when an individual holds two or more contradictory beliefs, ideas, or values, leading to discomfort and the motivation to reduce the inconsistency.

Unethical Decision

A choice made that goes against moral principles or ethical standards, often resulting in harm or unfairness to individuals or groups.

Guilt

A feeling of responsibility or remorse for some offense, crime, wrong, whether real or imagined.