Signal Sets Company Contracts to Deliver One Hundred 52-Inch Plasma

question 25

Essay

Signal Sets Company contracts to deliver one hundred 52-inch plasma high-definition television sets to a new retail customer,Tuner TV Store,on May 1,with payment to be made on delivery. Signal tenders delivery in its own truck. Tuner's manager notices that some of the cartons have scrape marks. Tuner's owner phones Signal's office and asks whether the sets might have been damaged as they were being loaded. Signal assures Tuner that the sets are in perfect condition. Tuner tenders Signal a check,which Signal refuses,claiming that the first delivery to new customers is always for cash. Tuner promises to pay the cash within two days. Signal leaves the sets with Tuner,which stores them in its warehouse pending its "Grand Opening Sale" on May 15. Two days later,Tuner's stocker opens some of the cartons and discovers that a number of the sets are damaged beyond ordinary repair. Signal claims Tuner has accepted the sets and is in breach by not paying on delivery. Will Signal succeed on these claims? Explain.

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Definitions:

Periodic Inventory System

An inventory management method where the inventory balance is updated at specific intervals, typically at the end of an accounting period, rather than continuously.

Cost Of Goods

The total cost of materials, labor, and manufacturing overhead expenses incurred in producing goods.

Physical Inventory

The process of counting and verifying the actual inventory on hand at a specific point in time.

LIFO Method

Last-In, First-Out, a method of inventory valuation where the most recently produced or acquired items are the first to be expensed.