Dallas Manufacturing Engaged in five transactions involving inventory at the end of 2011: 1. Ordered $50,000 of
Question:
1. Ordered $50,000 of inventory on December 29, 2011. The goods were shipped on December 30, 2011, with the terms FOB shipping point. Dallas received the inventory on January 4, 2012.
2. Received an order to sell inventory with a cost of $40,000. The goods were shipped to the customer on December 31, 2011, and received on January 3, 2012. The terms of the sale were FOB shipping point.
3. Received an order to sell inventory with a cost of $15,000. The goods were shipped to the customer on December 29, 2011, and received on January 2, 2012. The terms of the sale were FOB destination.
4. Ordered $10,000 of inventory on December 27, 2011. The inventory was shipped on December 27, 2011, with the terms FOB destination. Dallas received the inventory on December 31, 2011.
5. Ordered $75, 000 of inventory on December 30, 2011. The inventory was shipped on December 31, 2011, with the terms FOB destination. Dallas received the inventory on January 3, 2012.
Assume that Dallas included in inventory (12/31/11) all items from the five cases above. Explain how the resulting financial statements would be misstated.
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Step by Step Answer:
1 Since the goods were shipped FOB shipping point legal title to the goods passes to the buyer when the goods are shipped on December 30 2011 Since Da...View the full answer
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