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E6-1 Alou Company

Price: $1.99


E6-1 Premier Bank and Trust is considering giving Alou Company a loan. Before doing
so, management decides that further discussions with Alou’s accountant may be desirable.
One area of particular concern is the inventory account, which has a year-end balance of
$297,000. Discussions with the accountant reveal the following.

1. Alou sold goods costing $38,000 to Comerico Company, FOB shipping point, on December
28. The goods are not expected to arrive at Comerico until January 12. 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 include goods costing $95,000 that were
shipped to Alou FOB destination on December 27 and were still in transit at year-end.

3. Alou received goods costing $19,000 on January 2. The goods were shipped FOB shipping
point on December 26 by Grant Co. The goods were not included in the physical count.

4. Alou sold goods costing $35,000 to Emerick Co., FOB destination, on December 30.
The goods were received at Emerick on January 8. They were not included in Alou’s
physical inventory.

5. Alou received goods costing $44,000 on January 2 that were shipped FOB shipping
point on December 29. The shipment was a rush order that was supposed to arrive
December 31. This purchase was included in the ending inventory of $297,000.

Instructions
Determine the correct inventory amount on December 31

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