Alternate Assignment, Unit 2

Katina Hammond Unit 2 Seminar Alternate Assignment September 4, 2012 Frank Erlacher, an enumeration make specialist, is interested in better understanding the news report for inventories. Although Frank understands the more sophisticated computer take stock control systems, he has little knowledge of how inventory cost is determined. In studying the records of Strider Enterprises, which sells normal brand-name goods from its own store and on cargo through Chavez, Inc., he asks you to answer the following questions. 1. Should Strider Enterprises include in its inventory normal brand-name goods purchased from its suppliers but not yet accepted if the terms of purchase are f.o.b. shipping point? why? Yes. The title to the goods passed to Strider Enterprises when the supplier delivered the goods to the common carrier, who acts as an agent for Strider Enterprises. When Strider Enterprises obtained level-headed title to the goods, the company must record them as purchases in that fiscal period. If the goods were not put down, the results would be an understating in the inventories and accounts payable in the balance sheet, and an understating of the purchases and ending inventories in the income statement. 2.

Should Strider Enterprises include freight-in expenditures as an inventory cost? Why? Yes. Freight-in is considered a product cost. Product cost are enter in the inventory account. Such cost are directly connected with bringing the goods to Strider Enterprises and converting the goods to a marketable condition. 3. If Strider Enterprises purchases its goods on terms 2/10, net 30, should the purchases be recorded gross or net? Why? The purchases should be recorded net. Recording the purchases as net provides a correct coverage of the cost of the asset and related liability. Furthermore, recording such purchases as net can measure... If you want to get a teeming essay, order it on our website: Orderessay

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