Question

Tri-State Bank and Trust is considering giving Josef Company aloan. Before doing so, management decides that further discussionswith Josef’s accountant may be desirable. One area of particularconcern is the inventory account, which has a year-end balance of$348,500. Discussions with the accountant reveal thefollowing.

1.

 

Josef sold goods costing $38,900 to Sorci Company, FOB shippingpoint, on December 28. The goods are not expected to arrive atSorci until January 12. The goods were not included in the physicalinventory because they were not in the warehouse.

2.

 

The physical count of the inventory did not include goodscosting $93,500 that were shipped to Josef FOB destination onDecember 27 and were still in transit at year-end.

3.

 

Josef received goods costing $27,600 on January 2. The goodswere shipped FOB shipping point on December 26 by Solita Co. Thegoods were not included in the physical count.

4.

 

Josef sold goods costing $47,000 to Natali Co., FOBdestination, on December 30. The goods were received at Natali onJanuary 8. They were not included in Josef’s physicalinventory.

5.

 

Josef received goods costing $43,100 on January 2 that wereshipped FOB destination on December 29. The shipment was a rushorder that was supposed to arrive December 31. This purchase wasincluded in the ending inventory of $348,500.

 



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