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Colin Davis Machine Company maintains a general ledger account for each class of inventory, debiting such accounts for increases during the period and crediting them for decreases. The transactions below relate to the Raw Materials inventory account, which is debited for materials purchased and credited for materials requisitioned for use.
1. An invoice for $8,100, terms f.o.b. destination, was received and entered January 2, 2020. The receiving report shows that the materials were received December 28, 2019.
2. Materials costing $28,000, shipped f.o.b. destination, were not entered by December 31, 2019, “ because they were in a railroad car on the company’s siding on that date and had not been unloaded.”
3. Materials costing $7,300 were returned to the supplier on December 29, 2019, and were shipped f.o.b. shipping point. The return was entered on that date, even though the materials are not expected to reach the supplier’s place of business until January 6, 2020.
4. An invoice for $7,500, terms f.o.b. shipping point, was received and entered December 30, 2019. The receiving report shows that the materials were received January 4, 2020, and the bill of lading shows that they were shipped January 2, 2020.
5. Materials costing $19,800 were received December 30, 2019, but no entry was made for them because “they were ordered with a specified delivery of no earlier than January 10, 2020.”
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