At December 31, 2017 Mohling Company's inventory records indicated a balance of $632,000. Upon further investigation it was determined that this amount included the following:
-$112,000 in inventory purchases made by Mohling shipped from the seller 12/27/17 terms FOB destination, but not due to be received until January 2nd
-$74,000 in goods sold by Mohling with terms FOB destination on December 27^th. The goods are not expected to reach their destination until January 6^th.
-$6,000 of goods received on consignment from Dollywood Company
What is Mohling's correct ending inventory balance at December 31, 2017?

Question

Quizplus · Accepted Answer

To find the correct ending inventory balance at December 31, 2017, we need to adjust the inventory balance by removing the goods sold and adding the goods received. 
Adjusted balance = $632,000 - $74,000 + $6,000 = $564,000 
However, the goods purchased but not yet received should be included in the inventory balance, as they were shipped FOB destination. So we need to add the $112,000 in inventory purchases. 
Correct ending inventory balance = $564,000 + $112,000 = $676,000 
Therefore, the correct answer is D) $514,000.

At December 31, 2017 Mohling Company's Inventory Records Indicated a Balance