Question
Instruction: Analyze each scenario and decide whether such inventory will be INCLUDED or EXCLUDED in the inventory account of the company as of the end
Instruction: Analyze each scenario and decide whether such inventory will be INCLUDED or EXCLUDED in the inventory account of the company as of the end of the year. For those that are marked EXCLUDED, indicate the reason why it is to be excluded in the inventory at the end of the year.
1.Merchandise received on January 6, 2015. The invoice showed shipment was made FOB suppliers warehouse on Dec. 31, 2014. Since it was not on hand on Dec. 31, 2014, it was not included in inventory.
3.Merchandise was received on December 28, 2014, and the invoice was not recorded. It was located in the hands of the purchasing agent and was marked on consignment
4.In the shipping room was a product costing P100,000 when the physical count was taken. Because it was marked Hold for shipping instructions, it was not included in the count. The customer order was dated December 15, 2014 but the product was shipped and the customer billed on January 4, 2015.
5.Merchandise was received on January 10, 2015 and the related purchase invoice was recorded January 11, 2015. The shipment of this merchandise was made on December 31, 2014, FOB destination.
6.A product was sold on installment basis on December 31, 2014. It was delivered to the customer on that date. The product was included in inventory because the company still holds legal title. The companys experience suggests that full payment on installment sale is reasonably assured.
7.An item was sold and delivered to the customer on December 29, 2014. The goods were included in the inventory because the sale was with a repurchase agreement that requires the entity to buy back the inventory on January 15, 2015.
8.Merchandise costing P150000 was received on March 3, 2015 and purchase invoice recorded on March 5, 2015. Shipment was made on December 27, 2014 FOB destination
9. A special article, fabricated to order for a customer, was finished and in the shipping room on December 31, 2014. The customer was billed on that date and the article was excluded from inventory although it was shipped on January 5, 2015.
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