Physical Inventory Count, Ownership of Goods, and Consigned Goods

Bench Company’s Accounts Payable balance at December 31, 2011, was $1,900,000 before considering the following transactions: Goods were in transit from a vendor to Bench on December 31, 2011. The unpaid invoice price was $100,000, and the goods were shipped FOB shipping point on December 29, 2011. The goods were received on January 4, 2012. Goods shipped to Bench FOB destination on December 27, 2011, from a vendor were still in transit. The unpaid invoice price was $50,000 and the goods were received on January 2, 2012. In its December 31, 2011, balance sheet, Bench should report Accounts Payable of a. $1,950,000. b. $1,900,000. c. $2,050,000. d. $2,000,000.

Ritz Company agreed to purchase certain inventory items from Hostess Corporation. Hostess shipped the goods F.O.B. destination. On December 31, Ritz's accounting year-end, Ritz was aware that the goods had been shipped and would be received any day. a. Ritz should include the goods in its inventory calculated on December 31. b. Ritz should include the goods in its inventory calculated on December 31, but should not record the obligation to pay for them. c. Ritz should not include the goods in its inventory calculated on December 31, but should include the related payable on its balance sheet at December 31. d. Ritz should not include the goods in its inventory calculated on December.

Goods in transit which are shipped f.o.b. shipping point should be a. included in the inventory of the seller. b. included in the inventory of the buyer. c. included in the inventory of the shipping company. d. none of these.

Goods in transit which are shipped f.o.b. destination should be a. included in the inventory of the seller. b. included in the inventory of the buyer. c. included in the inventory of the shipping company. d. none of these.

Which of the following items should be included in a company's inventory at the balance sheet date? a. Goods in transit which were purchased f.o.b. destination. b. Goods received from another company for sale on consignment. c. Goods sold to a customer which are being held for the customer to call for at his or her convenience. d. None of these.

Goods on consignment are a. included in the consignee's inventory. b. recorded in a Consignment Out account which is an inventory account. c. recorded in a Consignment In account which is an inventory account. d. all of these

Dane Co. received merchandise on consignment. As of March 31, Dane had recorded the transaction as a purchase and included the goods in inventory. The effect of this on its financial statements for March 31 would be a. no effect. b. net income was correct and current assets and current liabilities were overstated. c. net income, current assets, and current liabilities were overstated. d. net income and current liabilities were overstated.

ABC Company sold merchandise to XYZ Company on 2/27/15 FOB Shipping Point. The goods were shipped on 2/28 and received by XYZ on 3/5. ABC Company will record the sale on: a. 2/27 b. 2/28 c. 3/5 d. ABC can record the sale on any of these dates

ABC Company places an order with XYZ Company for $100 on 9/27/15, terms 2/10, n/30 FOB destination. The order ships 9/29 and arrives at ABC Company on 10/2. When can XYZ company record a sale? a. 9/27 b. 9/29 c. 10/2 d. XYZ can record the sale on any of these dates

ABC Company places an order with XYZ Company for $100 on 9/27/15, terms 2/10, n/30, FOB destination, receives them on 9/30 and pays on 10/5. What journal entry should ABC Company make on 10/5, assuming a perpetual inventory system? a. Debit: A/P $100 and Credit: Cash $100 b. Debit: A/p $98 and Credit: Cash $98 c. Debit: A/P $100 and Credit: Cash $98 and Purchase Discounts $2 d. Debit: $100 and Credit: Cash $98 and Inventory $2

Frank’s Fine Furniture manufactures high quality dining room tables with matching chairs and sells these in its showroom in North Carolina. Frank decided to place 5 dining room sets on consignment with Rooms to Go, to test the market in Florida. Which of the following statements is true regarding this transaction? a. Rooms to Go should make the following entry when the furniture is received: Debit: Inventory and Credit: A/P b. Frank’s Fine Furniture should make the following entry when the furniture is shipped: Debit: A/R and Credit: Sales c. Assuming periodic inventory system, Frank should record COGS expense when Rooms to Go receives the furniture. d. No entry is required on Frank’s books or Rooms to Go’s books when the items are shipped and and received by Rooms to Go.

Which of the following statements is true? a. revenue is recorded when goods are shipped f.o.b. destination. b. revenue is recorded when cash collection is made. c. revenue is recorded upon delivery when goods are shipped f.o.b. destination. d. revenue is recorded either when the sale is made, collection occurs and/or delivery is made. It is the company’s decision.

Steal Me Company’s accounting records indicated the following information: Inventory, beginning of 2011                           $1,000,000 Purchases during 2011                                     5,000,000 Sales during 2011                                             6,400,000 A physical inventory taken on December 31, 2011, revealed actual ending inventory at cost was $1,150,000. Steal Me’s COGS on sales has regularly been 75 percent in recent years. The company believes some inventory may have been stolen during the year. What is the estimated amount of stolen inventory at December 31, 2011? a. $50,000 b. $200,000 c. $350,000 d. $370,000

The following statements regarding merchandise inventory are true except: a. Merchandise inventory refers to products a company owns and intends to sell. b. Merchandise inventory appears on the balance sheet of a service company. c. Merchandise inventory may include the costs of freight in and making them ready for sale. d. Purchasing merchandise inventory is part of the operating cycle for a business.