QUESTION 2: The XXX Corporation uses a perpetual inventory system that showed $1,250,000 of merchandise inventory at the end of the year, December 31.

Determine the correct inventory amount by preparing a schedule of adjusted inventory based upon the factors listed below. If an item does not require an adjustment, write No Adjustment on your schedule

1. XXX held $155,000 of inventory on consignment and included this amount in its year-end inventory.

2. Merchandise costing $22,000 was sold f.o.b. shipping point and excluded from the inventory. The goods were in transit to the customer December 31.

3. Merchandise costing $34,000 was shipped f.o.b. shipping point and was received by the customer January 2. XXX recorded the sale and reduction of inventory January 2.

4. Some customers were holding goods on consignment for XXX that cost $210,000. Since the goods were not in XXX's warehouse, they were excluded from the inventory.

5. Goods shipped to a customer f.o.b. destination costing $25,000 were in transit December 31 and were not recorded in XXXs inventory.

6. A freight bill for $2,000 was received by XXX on January 3 for merchandise received December 29 and included in inventory.