The Markoff Company buys inventory costing $11,000 from Montclair Corporation. Markoff plans to sell this merchandise for $19,000. The goods are shipping by Montclair on December 28, Year One and received by Markoff on January 3, Year Two. They were listed as FOB shipping point. Markoff uses a periodic inventory system and, on December 28, debited Purchases of Inventory for $11,000 and credited Accounts Payable for the same amount. Markoff failed to count this inventory when it took its December 31, Year One physical count because it had not yet arrived. In making Year One financial statements, which of the following is true for Markoff?