A. The Bookage Company shipped merchandise to Library Corporation on December 28, 2021. Library received the shipment on January 3, 2022. December 31 is the fiscal year-end for both companies. The merchandise was shipped f.o.b. shipping point. Explain the difference in the accounting treatment of the merchandise if the shipment had instead been designated f.o.b. destination.

B. The following inventory transactions took place near December 31, 2021, the end of the Raysut Companys fiscal year-end:

On January 5, 2022, merchandise costing R.O.8,000 was received from a supplier and recorded as a purchase on that date and not included in the 2021 ending inventory. The invoice revealed that the shipment was made f.o.b. shipping point on December 28, 2021.

On December 29, 2021, the company shipped merchandise costing R.O.12,000 to a customer f.o.b. destination. The goods, which arrived at the customers location on January 4, 2022, were not included in Raysuts 2021 ending inventory. The sale was recorded in 2021.

Merchandise costing R.O.4,000 was received on December 28, 2021, on consignment from the ABC Company. A purchase was not recorded and the merchandise was not included in 2021 ending inventory.

Merchandise costing R.O.6,000 was received and recorded as a purchase on January 8, 2022. The invoice revealed that the merchandise was shipped from the supplier on December 28, 2021, f.o.b. destination. The merchandise was not included in 2021 ending inventory.

Required:

State whether Raysut correctly accounted for each of the above transactions

Indicate the effect of the error (if any) in: accounts receivable, accounts payable, inventory, sales, cost of goods sold.

State the correct balance of ending inventory for Raysut Company as at December 31, 2021, assume the inventory balance prior to these adjustments was R.O. 100,000.