Shipping Terms and Transfer of Title On December 23, 2008, Miller Wholesalers ships merchandise…

 
   

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Shipping Terms and Transfer of Title

On December 23, 2008, Miller Wholesalers ships merchandise to Michael Retailers with terms of

FOB destination point. The merchandise arrives at Michael’s warehouse on January 3, 2009.

Required

1. Identify who pays to ship the merchandise.

2. Determine whether the inventory should be included as an asset on Michael’s December

31, 2008, balance sheet. Should the sale be included on Miller’s 2008 income statement?

Explain.

3. Explain how your answers to (2) would have been different if the terms of shipment had been

FOB shipping point.