The company Alou received goods costing $42,200 on January 2 that were shipped FOB shipping point on December 29. The shipment was a rush order that was supposed to arrive December 31. This purchase was included in the ending inventory of $337,590.
Determine the correct inventory amount on December 31.
So the homework answer states that "No effect - title passes to purchaser upon shipment when terms are FOB shipping point"
However to my knowledge, FOB shipping point means that the buyer owns the goods when it is in transit, so... wouldn't Alou have to add the 42,000 into their inventory? I don't understand why there is no effect.
Determine the correct inventory amount on December 31.
So the homework answer states that "No effect - title passes to purchaser upon shipment when terms are FOB shipping point"
However to my knowledge, FOB shipping point means that the buyer owns the goods when it is in transit, so... wouldn't Alou have to add the 42,000 into their inventory? I don't understand why there is no effect.
