Fun Land Toy Stores has taken a physical count of its inventory at January 31, its fiscal year-end. After reviewing the accounting records and documentation, the following items have been discovered:
(a) An invoice from Fleck Co. indicates that $30,000 of toys were shipped to Fun Land on January 27, terms FOB shipping point. The toys and invoice did not arrive at Fun Land until February 2 and were not included in the physical count.
(b) An invoice from Grande indicates that $8,000 of toys were shipped to Fun Land on January 29, terms FOB destination. The toys and invoice did not arrive at Fun Land until February 2 and were not included in the physical count. The physical count and cost assignment on January 31 prior to these two items is $440,000. The cost of goods sold for Fun Land is $2,100,000.
1. Calculate the amount that should be reported as ending inventory for Fun Land.
2. Calculate the days' sales in inventory before and after the appropriate adjustments for inventory.
Inventory means goods and products in which a business regularly deals. Inventories are the company's current assets, and companies show the ending balance of inventory on the balance sheet.
Answer and Explanation:
- FOB Shipping point means the buyers take the delivery once the goods leave the supplier's place. So this would be included in the balance of ending...
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fromChapter 13 / Lesson 7
Learn what inventory in business is. Find out three types of inventory management systems and the benefits of each. Understand inventory management through examples.