At December 31, 2012, Sunrise Company's inventory records indicated a balance of $752,000. Upon further investigation it was determined that this amount included the following:• $112,000 in inventory purchases made by Sunrise shipped from the seller December 27, 2012 terms FOB destination, but not due to be received until January 2, 2013• $74,000 in goods sold by Sunrise with terms FOB destination on December 27. The goods are not expected to reach their destination until January 6, 2013• $6,000 of goods received on consignment from Wallwood Company What is Sunrise's correct ending inventory balance at December 31, 2012?
Correct! The balance of $752,000 should not include the $112,000 since ownership passes at destination on January 2. It should include the $74,000 because ownership passes at the shipping point on December 27. It should not include the $6,000 on consignment because these goods are not owned by Sunrise. Corrected balance = $752,000 - $412,000 - $6,000 = $634,000.