Accounting Question for a CPA?

Question

1. The following information applied to Fenn, Inc. for 2003:

Merchandise purchased for resale $400,000
Freight-in $10,000
Freight-out $5,000
Purchase returns $2,000

Fenn’s 2003 INVENTORIABLE COST was

a) $400,000
b) $403,000
c) $408,000
d) $413,000

Answer 1

Fenn’s 2003 INVENTORIABLE COST was arrived at as follows:

Merchandise purchased for resale $400,000
Freight-in $10,000
Purchase returns ($2,000)
= $408,000

Freight-in is part of merchandise inventory but not freight-out. Freight-out is a selling expense, under Selling, General & Administrative expenses.

Answer 2

408,000

& to answer the question you emailed....it was a total guess from looking at your profile and other asked questions. I hope your daughter is not an Accounting major. I've been in Accounting classes with classmates like your daughter. Those were the folks who never made it past the third or fourth accounting class. The classes build on each other - if she doesn't put forth the effort to understand the concepts now, there's no way she'll get an Accounting degree.