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Fun Land Toy Stores has taken a physical count of its inventory at January 31, its fiscal...

Question:

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:

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:

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  • 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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What Is Inventory? - Definition & Example

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Chapter 13 / Lesson 7
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Learn what inventory in business is. Find out three types of inventory management systems and the benefits of each. Understand inventory management through examples.


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