Reference no: EM132757158
Question - LA Co. sells coats and boots. At the end of the period, LA's total inventory is $42,800. It has $14,500 of coats and $9,400 of boots onsite. It also has goods in transit including $5,200 of coats sold and shipped FOB shipping point to one customer, $4,100 of boots sold and shipped FOB destination to another customer, and $9,600 of boots purchased and shipped FOB shipping point from a supplier. Is LA's total inventory correct? Why?
A: It is correct because all items on site, FOB shipping point, and FOB destination in this scenario are part of LA's inventory.
B: It is $4,100 too high because the boots that were shipped FOB destination are considered part of the customer's inventory, not LA's inventory.
C: It is $5,200 too high because the coats that were shipped FOB shipping point are considered part of the customer's inventory, not LA's inventory.
D: It is $9,600 too high because the boots that were shipped FOB shipping point are considered part of the supplier's inventory, not LA's inventory.
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