As a Result of a Thorough Physical Inventory, Hastings Company

question 118

Multiple Choice

As a result of a thorough physical inventory, Hastings Company determined that it had inventory worth $540,000 at December 31, 2011.This count did not take into consideration the following facts: Carlin Consignment store currently has goods worth $104,000 on its sales floor that belong to Hastings but are being sold on consignment by Carlin.The selling price of these goods is $150,000.Hastings purchased $40,000 of goods that were shipped on December 27 FOB destination, that will be received by Hastings on January 3.Determine the correct amount of inventory that Hastings should report.

• A)$580,000.
• B)$684,000.
• C)$644,000.
• D)$690,000.

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Definitions:

Check Clearing

The process of transferring funds from the check writer's account to the recipient's account, finalizing the payment.

Compensating Balance

A minimum account balance that a borrower is required to maintain as a condition for obtaining a loan, it compensates the bank by offsetting the cost of providing the loan.

Effective Interest Rate

The interest rate on a loan or financial product restated from the nominal interest rate as an interest rate with annual compound interest payable in arrears.

Effective Interest Rate

The actual annual interest rate that takes compounding into account, providing a more accurate representation of the cost of borrowing.