At December 31, 2014, Jefferson, Inc

question 7

Essay

At December 31, 2014, Jefferson, Inc. had inventory on hand amounting to $270,000. The following items were not included in this inventory:

• Goods sold and still in transit, shipped Dec. 29 FOB destination, sales price $12,000, freight costs $500.
• Goods held by Johnson on consignment from Miller Company, sales price $12,500, shipping costs $300.
• Goods returned by customers and held pending inspection, cost $1,100.
• On Jan. 1, 2015, a monthly freight bill for $1,600 was received. The bill specifically related to merchandise purchased in December 2014, 40 percent of which was sold in December. No related adjustment had yet been made.
Jefferson sells at a gross profit of 25% on cost.
Required:
Compute the cost of ending inventory to be reported on Jefferson's December 31, 2014, balance sheet.

---

Definitions:

Long-term Liability

A debt or obligation not due within the current accounting year, requiring repayment over a longer period.

Warranty Repairs

Services provided to repair or fix products free of charge under a warranty agreement, considered a contingent liability when the product is sold.

Parts Inventory

The stock of components or parts kept on hand by a company to assemble products or perform service maintenance.

Note Payable

A written agreement where one party promises to pay another party a specific sum of money at a determined future date or on demand.