In your audit of Garza Company, you find that a physical inventory on
December 31, 2010, showed merchandise with a cost of $441,000 was on hand at that date. You also discover the following items were all excluded from the $441,000.
1. Merchandise of $61,000 which is held by Garza on consignment. The consignor is the Bontemps Company.
2. Merchandise costing $33,000 which was shipped by Garza f.o.b. destination to a customer on December 31, 2010. The customer was expected to receive the merchandise on January 6, 2011.
3. Merchandise costing $46,000 which was shipped by Garza f.o.b. shipping point to a customer on December 29, 2010. The customer was scheduled to receive the merchandise on January 2, 2011.
4. Merchandise costing $73,000 shipped by a vendor f.o.b. destination on December 30, 2010, and received by Garza on January 4, 2011.
5. Merchandise costing $51,000 shipped by a vendor f.o.b. shipping point on December 31, 2010, and received by Garza on January 5, 2011.
Based on the above information, calculate the amount that should appear on Garza's balance sheet at December 31, 2010, for inventory.
Solution is provided in a three column table format in the attached word file. It contains numerical adjustment in inventorial cost with necessary explanation against each corresponing item.
Statement showing correct valuation of Inventory on hand at Dec 31 2010
Sr No Details Cost Remarks
Ending Inventory as per the Physical count
on Dec 31 2010 $ 441000
1 Merchandise held on consignment ...
Inventoriable costs for Garza company is examined.