As a result of a thorough physical inventory, Hastings Company determined that it had inventory worth $270,000 at December 31, 2010. This count did not take into consideration the following facts: Carlin Consignment store currently has goods worth $52,000 on its sales floor that belong to Hastings but are being sold on consignment by Carlin. The selling price of these goods is $75,000. Hastings purchased $20,000 of goods that were shipped on December 27. FOB destination, that will be received by Hastings on January 3. Determine the correct amount of inventory that Hastings should report.
A) $290,000.
B) $342,000.
C) $322,000.
D) $345,000.

Question

Quizplus · Accepted Answer

To determine the correct amount of inventory, we need to consider the following:

1. Carlin Consignment store currently has goods worth $52,000 on its sales floor that belong to Hastings. However, these goods are being sold on consignment by Carlin. Therefore, they are not part of Hastings' inventory. The selling price of these goods is $75,000, but this information is irrelevant for determining the correct amount of inventory.

2. Hastings purchased $20,000 of goods that were shipped on December 27. FOB destination, that will be received by Hastings on January 3. Since the goods were shipped FOB destination, they are not yet part of Hastings' inventory.

Therefore, the correct amount of inventory should be:

Physical inventory at December 31, 2010 = $270,000
Add: Goods in transit as of December 31, 2010 = $0
Add: Goods on consignment at Carlin Consignment store = $0
Corrected inventory balance = $270,000

Therefore, the correct choice is C) $322,000.

As a Result of a Thorough Physical Inventory, Hastings Company