Exerciss
VLO 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 yearend balance of Discussions with
the accountant reveal the following.
Alou sold goods costing to Comerico Company, FOB shipping point, on December
The goods are not expected to arrive at Comerico until January The goods were not included in
the physical inventory because they were not in the warehouse.
The physical count of the inventory did not include goods costing that were shipped to
Alou FOB destination on December and were still in transit at yearend.
Alou received goods costing on January The goods were shipped FOB shipping point on
December by Grant Co The goods were not included in the physical count.
Alou sold goods costing to Emerick Co FOB destination, on December The goods
were received at Emerick on January They were not included in Alou's physical inventory.
Alou received goods costing on January that were shipped FOB shipping point on
December The shipment was a rush order that was supposed to arrive December This pur
chase was included in the ending inventory of
Instruction:
Determine the correct inventory amount on December