Sandoval needs to determine its year-end inventory. the warehouse contains 31,000 units, of which 4,100 were damaged by flood and are not sellable. another 3,100 units were purchased from markor company, fob shipping point, and are currently in transit. the company also consigns goods and has 5,100 units at a consignee's location. how many units should sandoval include in its year-end inventory

31,000

- 4,100 damaged goods

26,900

+ 3,100 in transit to markor co.

+ 5,100 consignment

35,100 units that sandoval should include it its year-end inventory

35,100 units

Explanation:

To calculate year-end inventory we need to determine whether each item mentioned in question should or should not be included in the inventory.

First is the 4,100 inventory damaged by flood and are not sale able. Only units that can be sold or used in manufacturing must be included in inventory. Therefore, this needs to be deducted from opening inventory units.

Next we have 3,100 units purchased from foreign company with the terms FOB shipping point. It is to be noted that the term FOB shipping point means that goods in transit are property of buyer. Therefore, must be added in the year-end inventory calculation.

Finally, the 5,100 units belong to the company and are only kept at consignee location. Therefore, should be made part of the year-end inventory units.

Below is the calculation:

Particular                                                    Units

Opening Inventory                                    31,000

Less: Damaged due to flood                     (4,100)

Add: Purchased (FOB shipping point)       3,100

Add: Goods Consigned                              5,100

Year-End Inventory                                     35,100

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