Question

As a result of a thorough physical inventory, Railway Company determined that it had inventory worth $180,000 at December 31, 2014. This count did not take into consideration the following facts. Rogers Consignment store currently has goods worth $35,000 on its sales floor that belong to Railway but are being sold on consignment by Rogers. The selling price of these goods is $50,000. Railway purchased $13,000 of goods that were shipped on December 27, FOB destination, that will be received by Railway on January 3. Determine the correct amount of inventory that Railway should report.

(a)$230,000.
(b)$215,000.
(c)$228,000.
(d)$193,000.

Answer 1

Answer:B. $215,000

Step-by-step explanation:

The cost price of goods on consignment with Rogers will be added to Railway stock for stock are stated at cost price and goods on consignment still forms part of suppliers stock that's Railway until they are sold.

However the goods purchased fob will not be included in Railway stock until it's received because it remains the property of the seller until it's received by the buyer.