CPA - Wiley Question ,, The following information applied to Fenn, Inc. for year 2: Merchandise purchased for resale $400,000 Freight-in 10,000 Freight-out 5,000 Purchase returns 2,000 Fenn’s year 2 inventoriable cost was _ a. $400,000 b. $404,000 c. $408,000 d. $413,000?

C. $ 408000

Solution:

Merchandise purchased                          400,000

Add: Freight in                                     10,000

Total purchases                                   410,000

Less: Purchase Return                         (2,000)

Total inventoriable cost (Net Purchases)  408000

Freight-out is a delivery expense. It is not inventoried because the goods have reached salable condition before incurring this cost. Only costs that contribute to preparing inventory for sale are inventoried.

Thank for invitation

The correct answer has been given which is $408000.

Purchases                 $400,000

Freight In                        10,000

Purchase returns           (2,000)

Inventoriable Cost    $408,000

The Answer is C 408000.Freight outward is not  to be included in inventories cost of purchase.

Inventory cost includes purchase price, freight-in expense, and any other expense related to prepare the asset for resale. Freight-out might be included in selling expenses. So, Fenn's inventoriable cost shall be $400,000 + $10,000 - $2,000 = $408,000

Purchase price Less: Purchase return ($400,000 - $2,000) = $398,000

Add: Freight-in $10,000

Inventoriable costs $408,000

The answer is :

Option  C : $ 408,000

option c 408,000/- correct

pur-400,000

prt-(2000)

freight in-10000

=400000-2000+10000-408,000/-

option c is correct $408,000.

400,000 +10,000 - 2,000 = $408,000.

........ Option C. 408000.........................

Answer is I think C $408,000