Question

Homestead Crafts, a distributor of handmade gifts, operates out of owner Emma Finn’s house. At the end of the current period, Emma looks over her inventory and finds that she has 1,800 units (products) in her basement, 27 of which were damaged by water and cannot be sold. 100 units in her van, ready to deliver per a customer order, terms FOB destination. 120 units out on consignment to a friend who owns a retail store. How many units should Emma include in her company’s period-end inventory?

Answer 1

The 1,993 units should Emma include in her company’s period-end inventory

Step-by-step explanation:

The computation is shown below:

= Units at the end of the year + units in her van + units in consignment for FOB destination - damaged units

= $1,800 units + 100 units + 120 units - 27 units

= 1,993 units

Since the damaged units should be deducted and the van & consignment units should be added to the period-end inventory