Banff Limited is trying to determine the value of its ending inventory as at February 28, the company's year end. The accountant counted everything that was in the warehouse in early March, which resulted in an ending inventory amount of $161,000. However, the accountant was not sure how to treat the following transactions, so she did not include them in the count, with the exception of item 8. She has asked for your help in determining whether or not the following transactions should be included in inventory:
1. Feb. 1 Banff received $2,000 of inventory on consignment from Kananaskis Limited. By February 28, Banff had sold one quarter of this inventory for Kananaskis.
2. 19 Banff purchased goods FOB shipping point from a supplier. The merchandise cost $2,500. The appropriate party paid the freight costs of $150. The goods were shipped by the supplier on February 21 and were received by Banff on March 1.
3. 22 Banff shipped goods FOB shipping point to a customer. The merchandise cost $2,600. The appropriate party paid the freight costs of $180. The receiving report indicates that the customer received the goods on March 1.
4. 23 Banff shipped $2,200 of inventory on consignment to a Jasper craft shop. By February 28, the craft shop had sold half of this inventory for Banff.
5. 24 Banff purchased goods FOB destination from a supplier. The merchandise cost $700. The appropriate party paid the freight costs of $35. The goods were shipped by the supplier on February 26 and received by Banff on March 2.
6. 26 Banff shipped goods FOB destination to a customer. The merchandise cost $1,800. The appropriate party paid the freight costs of $100. The receiving report indicates that the customer received the goods on March 3.
7. 27 Banff had $2,100 of inventory isolated in the warehouse. The inventory is designated for a customer who has requested that the goods not be shipped until March 2.
8. 28 Banff had damaged goods set aside in the warehouse because they were not saleable. These goods were included in the inventory count at their original cost of $800.
Instructions
(a) For each of the above situations, specify whether the item should be included in ending inventory, and if so, at what amount. For each item that is not included in ending inventory, indicate who owns it and what account, if any, it should have been recorded in.
(b) Calculate the revised ending inventory amount.