solution
Pharoah Company is trying to determine the value of its ending inventory as at February 28, 2021, the company’s year-end. The accountant counted everything that was in the warehouse as at February 28, which resulted in an ending inventory valuation of $61,000. However, he was not sure how to treat the following transactions, so he did not include them in inventory:
For each of the below transactions, specify whether the item should be included in ending inventory, and if so, at what amount.
Pharoah Company shipped $870 of inventory on consignment to Cullumber Company on February 20. By February 28, Cullumber Company had sold $335 of this inventory for Pharoah. On February 28, Pharoah was holding merchandise that had been sold to a customer on February 25 but needed some minor alterations. The customer has paid for the goods and will pick them up on March 3 after the alterations are complete. This inventory cost $480 and was sold for $880. 3. 4. In Pharoah’s warehouse on February 28 is $380 of inventory that Craft Producers shipped to Pharoah on consignment. On February 27, Pharoah shipped goods costing $940 to a customer and charged the customer $1,320. The goods were shipped FOB destination and the receiving report indicates that the customer received the goods on March 3.
choices for first 4 questions
1. include 535, exclude, include 870, or include 335
2. include 480, exclude, include 870, or include 880
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4. include 940, exclude, include 1320, or include 880
5. On February 26, Teulon Company shipped goods to Pharoah, FOB shipping point. The invoice price was $390 plus $30 for freight. The receiving report indicates that the goods were received by Pharoah on March 2. Pharoah had $600 of inventory put aside in the warehouse. The inventory is for a customer who has asked that the goods be shipped on March 10. On February 26, Pharoah issued a purchase order to acquire goods costing $735. The goods were shipped FOB destination. The receiving report indicates that Pharoah received the goods on March 2. 6. 7. 8. On February 26, Pharoah shipped goods to a customer, FOB shipping point. The invoice price was $350 plus $25 for freight. The cost of the items was $290. The receiving report indicates that the goods were received by the customer on March 4.
5. include 390, exclude, include 420, or include 30
6. include 600, exclude, include 420, or include 30
7. include 600, exclude, include 420, or include 735
8. include 350, exclude, include 25, or include 290
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