Physical Inventory Count, Ownership of Goods, and Consigned Goods Video Lessons

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Problem: 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.

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Problem Details

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.

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Based on our data, we think this problem is relevant for Professor Reinking's class at UCF.