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Inventory Value

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Problem 6-1A

Schilling Limited is trying to determine the value of its ending inventory as of February 28, 2007, the company's years end.. The accountant counted everything that was in the warehouse, as of February 28, which resulted in an ending inventory valuation of 48,000. However, she didn't know how to treat the following transactions so she didn't record them.
A) On February 26, Schilling shipped to a customer goods costing $800. The goods were shipped FOB shipping point, and the receiving report indicates that the goods were received by Schilling on March 2.
B) On February 26, Seller Inc. shipped goods to Schilling FOB destination. The invoice price was $ 350 plus $25 for freight. The receiving report indicates that the goods were received by Schilling on March 2.
C) Schilling had $500 of inventory at a customer's warehouse "on approval". The customer was going to let Schilling know whether it wanted the merchandise by the end of the week, March 4.
D) Schilling also had $400 of inventory at a Balena craft shop on consignment from Schilling.
E) ON February 26, Schilling ordered goods costing $750. The goods were shipped FOB shipping point on February 27. Schilling received the goods on March 1.
F) On February 28, Schilling packed goods and had them ready for shipping to a customer FOB destination. The invoice price was $350 plus $25 for freight; the cost of the items was $280. The receiving report indicates that the goods were received by the customer on March 2.
G) Schilling had damaged goods set aside in the warehouse because they are no longer saleable. These goods originally cost $400 and, originally, Schilling expected to sell these items for $600.

For each of the above transactions, specify whether the item in question should be included in the ending inventory, and if so, at what amount. For each item that is not included in the inventory, indicate who owns it and what account, if any, it should have been recorded in.

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Problem 6-1A

Schilling Limited is trying to determine the value of its ending inventory as of February 28, 2007, the company's years end.. The accountant counted everything that was in the warehouse, as of February 28, which resulted in an ending inventory valuation of 48,000. However, she didn't know how to treat the following transactions so she didn't record them.
A) On February 26, Schilling shipped to a customer goods costing $800. The goods were shipped FOB shipping point, and the receiving report indicates that the goods were received by Schilling on March 2.

Since the goods are shipped FOB shipping point, the title of goods passed to the customer once the goods are shipped. This inventory should not be included in Schilling's ending inventory. This should be recorded as sales by Schilling

B) On February 26, Seller Inc. shipped goods to Schilling FOB destination. The ...

Solution Summary

The solution explains the impact on the total inventory value of the given transactions.

$2.19