Reference no: EM134141

Question:

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

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

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

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

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