[Anonymous]

he following information applied to Fenn, Inc. for 2005:

Merchandise purchased for resale $400,000

Freight-in 10,000

Freight-out 5,000

Purchase returns 2,000

Fenn’s 2005 inventoriable cost was

A. $400,000

B. $403,000

C. $408,000

D. $413,000

C. Merchandise purchased for resale $400,000

Freight-in 10,000

Purchase returns (2,000)

Total inventoriable cost $408,000

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.

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If you have purchase returns, doesn’t that mean customers returned this stuff back to you, which means you have more inventory?

[jstay]

sales returns are when customers return back to you. purchase returns is when you return something back

[jstay]

i think…lol

[Anonymous]

I think you're right. I got sales returns and purchased returns mixed up.

[Author]

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