Essay Problem #2

Revolution Hardware reported $475,000 of inventory on December 31, 2016, based on a physical count.

Additional information is as follows:

Included in the 2016 physical count were machines billed to a customer FOB shipping point on December 31. These machines had a cost of $12,000 and had been billed at $30,000. The shipment was on Revolution's loading dock waiting to be picked up by the carrier.

Goods were in transit from a vendor to Revolution. The invoice cost was $85,000 and the goods were shipped FOB shipping point on December 29, 2016.

Work in process inventory (not included in the physical count) costing $7,850 was sent to an outside processor for finishing on December 30, 2016.

Goods out on consignment amounted to $26,500 (sales price) with shipping costs of $590 (not included in sales price). Markup is 15% on cost.