Flashcards in Current Liabilities Deck (2):
On December 28, 20X4, Black purchased and received goods for $153,061, terms 2/10, n/30. Black records purchases and accounts payable at net amounts. The invoice was recorded and paid on January 3, 20X5.
Goods shipped F.O.B. destination on December 20, 20X4 from a vendor to Black were received January 2, 20X5. The invoice cost was $65,000.
At December 31, 20X4, what amount should Black report as total accounts payable?
Preadjusted balance in accounts payable
Plus checks not sent to creditors until Jan. 10 (this amount was debited to accounts payable and must be reversed because the checks have not been sent - accounts payable has not been reduced as of December 31)
Plus goods received Dec. 28, at net: .98($153,061)(the firm records purchases at net of 2% discount)
Equals ending accounts payable
There is no liability at December 31, 20X4 for the goods shipped FOB destination because title does not pass until the goods reach the destination, which did not occur until January.
The firm must include the Dec. 28 receipt of goods in accounts payable because the firm has received the goods.