Question
The Deluxe Company sells toothbrushes. The following information has been extracted from the records of Deluxe. Jan 1: Beginning inventory = 10,000 units @ $2
The Deluxe Company sells toothbrushes. The following information has been extracted from the records of Deluxe. Jan 1: Beginning inventory = 10,000 units @ $2 each Jan 10: Buy 10,000 units @ $3 Jan 15: Sell 5,000 units @ $5 Jan 30: Buy 4,000 units @ $4 If Deluxe bought on account a purchase of 10,000 units on January 28, terms FOB Destination, which was not received by the time of the January 31 physical inventory count and was excluded from both inventory and payables, it:
- would be overstating both inventory and payables
- would be understating both inventory and payables
- is correctly following GAAP
- would be overstating payables and understating inventory
- would be understating payables and overstating inventory
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Fundamental Managerial Accounting Concepts
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Old
7th edition
978-0077632427, 77632427, 78025656, 978-0078025655
