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 destination, costing $7,000. 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. Split $7,000 between Jain and the supplier based on the distance proportionally.

b. Increase inventory by $7,000

c. Decrease inventory by $7,000

d. No adjustment is needed