Assume that in an annual audit of Cullumber Inc. at December 31, 2025, you find the following transactions near the closing date. Assuming that each of the amounts is material, state whether the merchandise should be included in the client's inventory. 1. 2. 3. 4. Transactions A special machine, fabricated to order for a customer, was finished and specifically segregated in the back part of the shipping room on December 31, 2025. The customer was billed on that date and the machine excluded from inventory although it was shipped on January 4, 2026. Merchandise costing $6,300 was received on January 3, 2026, and the related purchase invoice recorded January 5. The invoice showed the shipment was made on December 29, 2025, f.o.b. destination. A packing case containing a product costing $7,650 was standing in the shipping room when the physical inventory was taken. It was not included in the inventory because it was marked "Hold for shipping instructions." Your investigation revealed that the customer's order was dated December 18, 2025, but that the case was shipped and the customer billed on January 10, 2026. The product was a stock item of your client. Merchandise received on January 6, 2026, costing $1,530 was entered in the purchase journal on January 7, 2026. The invoice showed shipment was made f.o.b. supplier's warehouse on December 31, 2025. Because it was not on hand at December 31, it was not included in inventory.

Assume that in an annual audit of Cullumber unc. at December 31.2025, you find the following transactions near the closing date. Assuming that each of the amounts is material, state whether the merchandise should be included in the client's inventory. Transactions 1. A special machine, fabricated to order for acustorner, was finished and specifically segregated in the back part of the shipping room on December 31. 2025. The customer was billed on that date and the machine exchaded from inwentory although it was shipped on January 4, 2026 2. Merchandise costing 56,300 was received on January 3,2026 , and the related purchase invoice recor ded January 5, The invoice showed the shipment was made on December 29,2025 , fo.b. destination 3. A packing case containing a product conting $7,650 was standing in the shipping room when the glyssical inventory was taken, it was not included in the inventory because it was marked "Hold for shipging instructioms:" Your imvestination revealed that the customer's order was dated December 18. 2025, but that the case was shipped and the customer billed on January 10,2026 . The product was a stockitem ot your cient 4. Merchandise recelwed on Jamaly 6.2026 . costing 51.530 was entered in tie purchase journaton Jancary 7, 2026. The invoice thomed shipment was made fot, muppliet w wrehouce on December 1. 2025. Bechuse it was not on luand at Becember a1. it was not inchided in itwentary