1. On January 29, 2022, Reno Corporation sold and shipped merchandise to Art, Inc. for $800,000 on credit. Goods were shipped FOB shipping point and arrived at Art warehouse on February 2. Which of the following statements is true?
   1. Art, Inc. includes the $800,000 as part of its January 31 Inventory balance.
   2. Reno Corporation includes the $800,000 as part of its January 31 Inventory balance.
   3. The goods are in transit on January 31 so neither company includes the $800,000 as part of its January 31 Inventory balance.
   4. Both companies include the $400,000 as part of their January 31 Inventory balances.