[christianjdsgirl]

Okay well how would these events affect the inventory total

The company received an order on December 29 that was boxed and was sitting on the loading dock awaiting pick-up on December 31. The shipper picked up the goods on January 1 and delivered them on January 6. The shipping terms were FOB shipping point. The goods had a selling price of $40,000 and a cost of $30,000. The goods were not included in the count because they were sitting on the dock.

On December 29 Nathan shipped goods with a selling price of $80,000 and a cost of $60,000 to Central Sales Corporation FOB shipping point. The goods arrived on January 3. Central Sales had only ordered goods with a selling price of $10,000 and a cost of $8,000. However, a sales manager at Nathan had authorized the shipment and said that if Central wanted to ship the goods back next week, it could.


So what I concluded and got wrong was that in the first event since the items were being sent on FOB shipping point meaning the company passed the ownership of the goods to the buyer that the inventory total was being affected by subtracting 70,000 from the total because of the selling price and cost of products but this turned out to be wrong n I have no idea what to do. I did the same thing for the second event and got that wrong also sooo I'm just soooo confused so HELPPPPP MEEEEEE

[CaptainForest]

1)
FOB Shipping point means ownership transfers when shipped. So in this case, Jan 1.

Therefore , the good should have been included in the count on December 31, but they were not. They have a cost of 30,000, so the inventory must be increased by 30,000


2)
I would say that 8,000 represents goods to Central (as that is what they ordered), and the remaining 52,000 represents consignment sales, so inventory is attributed back to Nathan.

[morgaine300]

I think you need to get straightened out that idea of adding sales price and cost. You can't add them. If I buy something for $10 (cost) and sell it for $15 (sales), adding those two numbers has no meaning. It's the same item, not two different items to be added together. The $10 is part of the $15, not in addition to it. I buy for $10, I mark it up $5 (gross profit) and sell it for $15. The number $25 is not anything at all.

And inventory is always, always, always listed at cost. If you list anything at sales, you've taken your profit before you sell it.

I think (2) is questionable. If you have not learned things like consigned sales, the problem would not expect you to do it. It's on the books as a sale and if it's included in sales, it would have to be out of inventory. (The whole amount.) There will be a return in January. Or, it could also be as CaptainForest said. But it depends a lot on the level you're at and what you have or haven't learned at this point.