Question

Ivanhoe Company took a physical inventory on December 31 and determined that goods costing $669,000 were on hand. Not included in the physical count were $11,000 of goods purchased from Pharoah Corporation, f.o.b. shipping point, and $27,000 of goods sold to Ro-Ro Company for $36,000, f.o.b. destination. Both the Pharoah purchase and the Ro-Ro sale were in transit at year-end. What amount should Ivanhoe report as its December 31 inventory

Answer 1

Ivanhoe should report as its December 31 inventory $707,000

Step-by-step explanation:

According to the given data we have the following:

Inventory in hand= $669,000

goods purchased from Pharoah Corporation, f.o.b. shipping point= $11,000

cost of goods sold to Ro-Ro Company=$27,000

Therefore, in order to calculate the amount should Ivanhoe report as its December 31 inventory we have to make the following calculation:

inventory = Inventory in hand+goods purchased from Pharoah Corporation, f.o.b. shipping point+cost of goods sold to Ro-Ro Company

inventory =$669,000+$11,000+$27,000

inventory =$707,000

Ivanhoe should report as its December 31 inventory $707,000