Answer:
To compute the amount that should be reported for inventory on Adidas AG's balance sheet at December 31, we need to adjust the physical count of inventory by considering the items that should be included or excluded.
Adjustments to be made:
Exclude the inventory purchase of $52,100 made by Adidas, as it was shipped from Amazon on December 28 with terms FOB destination and not due to be received until January 3.
Include the goods shipped to a customer with a cost of $74,800 with terms FOB destination on December 29, as it is in transit and should be included in the inventory.
Exclude the goods shipped to a customer with a cost of $55,800 with terms FOB shipping point on December 30, as it is not expected to reach its destination until January 5.
Include the goods held on consignment from Lock Laces Company with a cost of $16,400, as it should be included in the inventory.
Calculation:
Physical count of inventory = $1,644,000 Adjustments:
Exclude: $52,100
Include: $74,800
Exclude: $55,800
Include: $16,400
Adjusted inventory amount = $1,644,000 - $52,100 + $74,800 - $55,800 + $16,400 Adjusted inventory amount = $1,627,300
Therefore, the amount that should be reported for inventory on Adidas AG's balance sheet at December 31 is $1,627,300.
