P7.1 (Algo) Analyzing Items to Be Included in Inventory LO7-1 Travis Company has just completed a physical inventory count at year-end, December 31 of the current year, Only the items on the shelves, in storage, and in the receiving area were counted and costed on a FIFO basis. The inventory amounted to $66,600. During the audit, the independent CPA developed the following additional information: a. Goods costing $900 were being used by a customer on a trial basis and were excluded from the inventory count at December 31 of the current year. b. Goods in transit on December 31 of the current year, from a supplier, with terins FoB destination (explained in the "Riequited" section), cost \$1, $00. Because these goods hod not yet errived, they were excluded from the physical inventory count. c. On December 31 of the current year, goods in transit to customers, with terms FOB shipping point, amounted to $1,800 (expected delivery date January 10 of next year). Becouse the goods hod been shipped, they were excluded from the physical inventory count. d. On December 28 of the current year, a customer purchased goods for cash amounting to $2,650 and left them "for pickup on January 3 of next year." Travis Company had paid $1,710 for the goods and, because they were on hand, included the latter amount in the physical imventory count. e. On the date of the inventory count, the company recelved notice from a supplier that goods ordered earlier at a cost of $3,650 had been delivered to the transportation company on December 27 of the current year, the terms were FOB shipping point. Because the shipment had not artived by December 31 of the current year, it was excluded from the physical inventory count. t. On December 31 of the current yeac, the company shipped $1,550 worth of goods to a customes, FOB destination. The goods are expected to arrive at their destination no earlier than January 8 of next yeac. Becouse the goods were not on hand, they were not included in the physical inventory count. 9. One of the items sold by the company has such a low volume that management planned to drop it last year. To induce Travis Company to continue carrying the item, the manufacturen-supplier provided the ilem on a "consignment basis" This means that the manufacturer-suppliet fetains owriership of the item, and Travis Compary (the consignee) has no responsibility to pay for the items until they are sold to o customer, Each month, Travis Company sends a report to the manufacturer on the number sold and remits cash for the cost. At the end of December of the current year, Travis Company had nine of these items on hand, therefore. they were included in the physical inventory count at $770 each. Required: Assume that Travis's accounting policy requires inclucling in imventory all goods for which it has stle. 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 normaliy pays for shipping. When they are shipped "Foes destination," title changes hands on delivery, and the seller normally pays for shipping. Compute the correct amount for the ending inventory. P7.1 (Algo) Analyzing Items to Be Included in Inventory LO7-1 Travis Company has just completed a physical inventory count at year-end, December 31 of the current year, Only the items on the shelves, in storage, and in the receiving area were counted and costed on a FIFO basis. The inventory amounted to $66,600. During the audit, the independent CPA developed the following additional information: a. Goods costing $900 were being used by a customer on a trial basis and were excluded from the inventory count at December 31 of the current year. b. Goods in transit on December 31 of the current year, from a supplier, with terins FoB destination (explained in the "Riequited" section), cost \$1, $00. Because these goods hod not yet errived, they were excluded from the physical inventory count. c. On December 31 of the current year, goods in transit to customers, with terms FOB shipping point, amounted to $1,800 (expected delivery date January 10 of next year). Becouse the goods hod been shipped, they were excluded from the physical inventory count. d. On December 28 of the current year, a customer purchased goods for cash amounting to $2,650 and left them "for pickup on January 3 of next year." Travis Company had paid $1,710 for the goods and, because they were on hand, included the latter amount in the physical imventory count. e. On the date of the inventory count, the company recelved notice from a supplier that goods ordered earlier at a cost of $3,650 had been delivered to the transportation company on December 27 of the current year, the terms were FOB shipping point. Because the shipment had not artived by December 31 of the current year, it was excluded from the physical inventory count. t. On December 31 of the current yeac, the company shipped $1,550 worth of goods to a customes, FOB destination. The goods are expected to arrive at their destination no earlier than January 8 of next yeac. Becouse the goods were not on hand, they were not included in the physical inventory count. 9. One of the items sold by the company has such a low volume that management planned to drop it last year. To induce Travis Company to continue carrying the item, the manufacturen-supplier provided the ilem on a "consignment basis" This means that the manufacturer-suppliet fetains owriership of the item, and Travis Compary (the consignee) has no responsibility to pay for the items until they are sold to o customer, Each month, Travis Company sends a report to the manufacturer on the number sold and remits cash for the cost. At the end of December of the current year, Travis Company had nine of these items on hand, therefore. they were included in the physical inventory count at $770 each. Required: Assume that Travis's accounting policy requires inclucling in imventory all goods for which it has stle. 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 normaliy pays for shipping. When they are shipped "Foes destination," title changes hands on delivery, and the seller normally pays for shipping. Compute the correct amount for the ending inventory