Change in Shipping Procedures Miracle Dust Corporation sells its super dust-free floor polish through wholesalers. Miracle Dust reported a $100,000 increase in sales in 2001. In reading the footnotes to the financial statements, you discover that Miracle Dust changed its terms of sale in 2001 from f.o.b. destination to f.o.b. shipping point.

The following year-end sales were reported in 2000 and 2001:

a. If Miracle Dust had not changed the terms of its sales, by what amount would reported sales have increased or decreased from 2000 to 2001?

b. Will the change in the way sales are recorded affect the way you evaluate the increase in sales reported for 2001?
Explain.

c. What factors might have motivated Miracle Dust to make the change?

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Date Shipped to Customer Dec. 28, 2000 Dec. 30, 2000 Dec. 28, 2001 Date Received by Customer Jan. 2, 2001 Amount of Sale $ 40,000 60,000 Jan. 5, 2001 Jan. 2, 2002 90,000 Dec. 30, 2001 Jan. 5, 2002 100,000