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EXERCISE 8.5 Transfer of Title ( LO8-2, LO8-3, Jensen Tire...

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Accounting

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EXERCISE 8.5 Transfer of Title ( LO8-2, LO8-3, Jensen Tire had two large shipments in transit at December 31 . One was a $130.000 inbound shipment of merehandisc (shipped December 28. F.O.B. shipping point), which arrived at Jensen's receiving dock on January 2. The other shipment was a $95,000 outbound shipment of merchandise to a customer, which was shipped and billed by Jensen on December 30 (terms F.O.B. shipping point) and reached the customer on January 3 . In taking a physical inventory on December 31 , Jensen counted all goods on hand and priced the inventory on the basis of average cost. The total inventory amount was $600.000. No goods in transit were included in this fgure. What amount should appear as inventory on the company's balance sheet at December 31 ? Explain. If you indicate an amount other than $600.000. state which asset or liability other than inventory also would be changed in amount, assuming that all inventory purehases are made on credit

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