The Jain Company has just completed a physical inventory count at year end, December 31, 2018. The inventory amounted to $85,000. During the audit, the internal auditor discovered the following information. Select proper adjustment for the following record for Jain Company.

There were goods in transit on December 31, 2018, from a supplier with terms FOB shipping point, costing $10,000. Because the goods had not arrived, they were excluded from the physical inventory count.

The proper adjustment for this record is:

Group of answer choices

a. Increase inventory by $10,000

b. Decrease inventory by $10,000

c. Split $10,000 between Jain Company and the supplier proportionally based on the number of shipping days

d. No adjustment is needed