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Gatineau Bank is considering giving Novak Corporation a short - term bank loan. Before doing so , it decides that further discussions with Novak's accountant
Gatineau Bank is considering giving Novak Corporation a shortterm bank loan. Before doing so it decides that further discussions
with Novak's accountant may be desirable. One area of particular concern is the Inventory account, which, according to a recent
physical inventory count, has a balance of $ at December This count agreed with the accounting records. Discussions with
the accountant revealed the following:
Novak sold goods costing $ to Indiabased Moghul Company, FOB destination, on December Novak does not
expect the goods to arrive in India until January The goods were not included in the physical inventory count, because
they were not in the warehouse.
The physical inventory count did not include goods costing $ that a supplier shipped to Novak, FOB shipping point, on
December and that were still in transit at year end.
Novak received goods costing $ on January The goods were shipped FOB shipping point on December by Cellar
Corp. The goods were not included in the physical inventory count.
Novak sold goods costing $ to United Kingdombased Sterling of Britain Ltd FOB shipping point, on December
Sterling received the goods on January They were not included in Novak's physical inventory count.
On December Schiller Corporation had $ of goods held on consignment for Novak. The goods were not included in
the physical inventory count.
Included in the physical inventory count were $ of parts for outdated products that the company had not been able
sell. It is unlikely that these obsolete parts will have any other use.
a
Determine the correct inventory amount on December
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