Question:
Premier Trust and Bank is considering giving Alou Company a loan. Before doing so, management decides that further discussions with Alou's accountant can be desirable. One area of exacting concern is the inventory account, which has a year-end balance of $297,000. Discussions with the accountant reveal the subsequent.
1. Alou sold goods costing $38,000 to Comerico corporation, FOB shipping point, on 28. The goods are not expected to arrive at Comerico until 12th January. The goods were not included in the physical inventory because they were not in the warehouse.
2. The physical count of the inventory did not add goods costing $95,000 that were shipped to Alou FOB destination on 27th December and were still in transit at year-end.
3. Alou received goods costing $19,000 on 2nd January. The goods were shipped FOB shipping point on 26th December by Grant Co. The goods were not add in the physical count.
4. Alou sold goods costing $35,000 to Emerick Co., FOB destination, on 30th December. The goods were received at Emerick on 8th January. They were not included in Alou's physical inventory.
5. Alou received goods costing $44,000 on 2nd January that were shipped FOB shipping point on December 29. The shipment was a rush order that was supposed to arrive 31st December. This purchase was included in the ending inventory of $297,000.