Peosta

[logistic_guy]

\(\displaystyle \text{Peosta Company}\) identifies the following items for possible inclusion in the taking of a physical inventory. Indicate whether each item should be included or excluded from the inventory taking.

\(\displaystyle \bold{(a)}\) Goods shipped on consignment by \(\displaystyle \text{Peosta}\) to another company.
\(\displaystyle \bold{(b)}\) Goods in transit from a supplier shipped \(\displaystyle \text{FOB}\) destination.
\(\displaystyle \bold{(c)}\) Goods sold but being held for customer pickup.
\(\displaystyle \bold{(d)}\) Goods held on consignment from another company.

 

[khansaheb]

\(\displaystyle \text{Peosta Company}\) identifies the following items for possible inclusion in the taking of a physical inventory. Indicate whether each item should be included or excluded from the inventory taking.

\(\displaystyle \bold{(a)}\) Goods shipped on consignment by \(\displaystyle \text{Peosta}\) to another company.
\(\displaystyle \bold{(b)}\) Goods in transit from a supplier shipped \(\displaystyle \text{FOB}\) destination.
\(\displaystyle \bold{(c)}\) Goods sold but being held for customer pickup.
\(\displaystyle \bold{(d)}\) Goods held on consignment from another company.

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[logistic_guy]

\(\displaystyle \bold{(a)}\) Goods shipped on consignment by \(\displaystyle \text{Peosta}\) to another company.

Goods shipped to another company on consignment are still included in the inventory count, as consigned goods remain the responsibility of the consignor and are not recorded by the consignee. Therefore, in this case, the inventory should still be included in Peosta Company's inventory count.

 

[logistic_guy]

\(\displaystyle \bold{(b)}\) Goods in transit from a supplier shipped \(\displaystyle \text{FOB}\) destination.

To address this exercise, the item in question should not be included in the inventory count. Ownership of goods is determined by the shipping terms specifically FOB shipping point or FOB destination.

Under FOB shipping point, ownership transfers to the buyer once the goods leave the seller’s location. Conversely, under FOB destination, ownership remains with the seller until the goods are delivered to the buyer.

As such, this situation should be \(\displaystyle \textcolor{blue}{\text{excluded}}\) from Peosta Company's inventory.

 

[logistic_guy]

\(\displaystyle \bold{(c)}\) Goods sold but being held for customer pickup.

To answer the exercise, these goods will be included in the inventory count. Although they have been sold to the customer, legal ownership remains with the seller as long as the goods are still on the seller’s premises.

Therefore, this situation should be included in Peosta Company's inventory count.

 

[logistic_guy]

\(\displaystyle \bold{(d)}\) Goods held on consignment from another company.

To solve this exercise, it’s important to remember that consigned goods are typically owned by the consignor, not the consignee. In this case, Peosta Company is acting as the consignee, so the goods should not be included in its inventory count.

As a result, this situation should be excluded from Peosta Company’s inventory.