alonzo spellman, an inventory control specialist, is interested in better understanding the accounting for inventories. although alonzo understands the more sophisticated computers control systems, he has little knowledge of how inventory cost is determined. In studying the records of ditka enterprises, which sells normal brand-name goods from its own store and on consignment through wannestedt, inc., he asks you to answer the following questions.

Instructions:

(a) Should Ditka Enterprises inclde in its inventory normal brand-name goods purchases from its suppliers but not yet received if the terms of purchase are f.o.b. shipping point (manufacturer's plant)? Why?

(b) Should Ditka Enterpirses include freight-in expenditures as an inventory cost? Why?

(c) What are products on consignment? How are the products that are on consignment reported on the financial statements?