Safari File Edit View History Bookmarks Window Help Chapter ? Table of E7-1 Analyzing Items to Be Included in Inventory LO7-1 Based on its physical count of inventory in its warehouse at year-end, the independent CPA developed the following additional information December 31 of the current yoar, Madison Company planned to repont inventory of $35,400. During the a. Goods from a supplier costing $730 are in transit with UPS on December 31 of the current year. The terms are FOB shipping point (explained in the "Required section). Because these goods had not yet arrived, they were excluded from the physical inventory count the next year. Because these goods were not on hand, they were excluded from the inventory count. Because the goods had been shipped, they were excluded from the physical inventory count Because the goods had been shipped, they were excluded from the physical inventory count to a customer on December 27 of the current year, with the understanding that they would be retuned to Madison on January 15 of C. On December 31 of the current year, goods in transit to customers, with terms FOB shipping point, amounted to $7,200 (expected delivery date January 10 of the next year) d. On December 31 of the current year, goods in transit to customers, with terms FOB destination, amounted to $2,400 (expected delivery date January 10 of the next year) Required Madison's accounting policy requires including in inventory all goods for which it has tile. 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, btle changes hands at shipment and the buyer normaly pays for shipping. When they are shipped "FOB destination," title changes hands on delivery, and the seller normally pays for shipping. Begin with the $35,400 inventory amount and compute the correct amount for the ending inventory. ("If no adjustment is necessary, enter a $0 in the cell."). Ending inventory (physical count on December 31 of the current year) 35400 a. Goods purchased and in transit b. Samples out on trial to customer C. Goods in transit to customer d. Goods sold and in transit Correct inventory, December 31, current year $ 35,400