Question

Knowledge Check 01 Hales Inc. ships goods on December 30 to Osher Inc., who receives the goods on January 2. Both companies have December 31 year-ends. If the goods are shipped f.o.b. shipping point, which of the following statements is (are) correct

Hales will include the goods in its December 31 inventory
Osher will include the goods in its December 31 inventory
Hales will record the sale on December 30, Holes wil record the sale on January 2.
Osher will record the purchase on December 30.
Osher will record the purchase on January 2.

Answer 1

Answer:

Osher will include the goods in its December 31 inventory

Hales will record the sale on December 30,

Osher will record the purchase on December 30.

Explanation:

In the given situation, since the goods are shipped on December 30 and the goods are received on January 2

And, the goods are shipped under f.o.b. shipping point i.e the risk and the rewards should be transferred from seller to buyer along with the goods so in this case the three transactions should be considered i.e osher should included the goods on December 31 inventory, the hales should records the sales, and the osher record the purchase made on December 30