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P7-1 (Algo) Analyzing items to Be Included in Inventory LO7.1 Travis Company has just completed a physical inventary count at year-end, December 31 of the

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P7-1 (Algo) Analyzing items to Be Included in Inventory LO7.1 Travis Company has just completed a physical inventary count at year-end, December 31 of the current year. Only the hems on the shelves, In storage, and in the recelving area were counted and costed on a Fifo basis. The inventory amounted to $66,900. During the audit, the independent CPA developed the following additional information: a. Goods costing $940 were being used by a customer on a trial basis and were excluded from the inventary count at December 31 of the current yeat. b. Goods in transit on December 31 of the current year, from a suppliet, with terms FOB destination fexplained in the "Required" section), cost $1,850. Because these goods had not yet arrived, they were excluded from the physical inventory count. c. On December 31 of the current yeak, goods in transit to customers, with terms FOB shipping point, amounted to 51,800 (expected defivery date January 10 of next year). Because the goods had been shipped, they were excluded from the physical inventory count d. On December 28 of the current yeac, a customer purchased goods for cash amounting to $2,650 and left them Yor pickup on January 3 of next yeak: Travis Company had paid $1,620 for the goods and, because they were on hand, included the latter amount in the physical inventory count. e. On the date of the inventary count, the company recelved notice from a supplier that goods ordered earlier at a cost of $4,500 had been delivered to the transportation compeny on December 27 of the currentyear, the terms were FOQ shipping point. Becsuse the shipment had not arrived by December 31 of the current year, it was excluded from the physical inventory count. 1. On December 31 of the current yeas, the company shipped $1,100 worth of goods to a customes, FO8 destination. The goods are expected to arrive at their destination no earlier than January 8 of next year. Because the goods were not on hand, they were not included in the physical inventory count 9. One of the hems sold by the company has such a low volume that manegement planned to drop it last yoat. To induce Travis Company to continue carrying the item, the manufacturer-supplier provided the item on a "consignment basis." This means that the manufacturer-supplier retains ownership of the them, and Travis Company (the consignee) has no responsiblity to pay for the items until they are sold to a customer. Each month. Travis Company sends a report to the manufacturer on the number soid and remits cash for the cost. At the end of December of the current year, Travis Company had eight of these hems on hand; therefore, they were included in the physical inventory count at $780 each. Required: Assume that Travis's accounting policy requires inclubing in inventory all goods for which it has title. Note that the point where title (ownership) changes hands is determined by the shipping terms in the sales contract. When goods are shipped "FOB shipping point," titie changes hands at shipment, and the buyer normally pays for shipping. When they are shipped "FOB destination" titie changes hands on delvery, and the seller normally pays for shipping. Compute the correct amount for the ending inventory. Note: Deductible amounts should be entered with a minus sign

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