Please Help! Helgeson Company has identified the following items for possible inclusion when taking a physical inventory. Indicate whether each item should be included or excluded from the inventory.

Question

Helgeson Company has identified the following items for possible inclusion when taking a physical inventory. Indicate whether each item should be included or excluded from the inventory, explain why.

1.Goods shipped on consignment by Helgeson to another company 

2.Goods in transit from a supplier, shipped FOB destination

3.Goods sold but being held for customer pickup

4.Goods held on consignment from another company

5.Goods in transit to a customer, shipped FOB destination 

Answer 1

1. Goods shipped on consignment would be included in the physical inventory of Helgeson. Since they own the goods and are just letting another business or person sell them or hold them at their store for consignment sale, they should be included.
2. Not included. Goods are shipped FOB destination meaning that Helgeson takes ownership when the goods are received at the destination (ie by Helgeson).
3. Probably not included. Since the goods have been sold, the seller cannot resell the goods to someone else unless an agreement dictates otherwise.
4. Not included. When goods are held on consignment FOR another company, they should be included in the inventory of the other company (the owners of the goods) not Helgeson.
5. Included. FOB destination means that legal title will be given to the buyer when the goods reach their destination. Until then, the goods are Helgeson’s responsibility and should be included in their inventory.