Question:

Jawhara Company completed its inventory count. It arrived at a total inventory value of SR500,000. You have been given the information listed below. Discuss how this information affects the reported cost of inventory.

1. Jawhara included in the inventory goods held on consignment for Falls Co., costing SR40,000.

2. The company include in the count purchased goods of 20,000, which were in transit (terms: FOB shipping point).

3. The company did not include in the count inventory that had been sold with a cost of SR30,000, which was in transit (terms: FOB shipping point)