Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition

SOLUTION TO EXERCISE 6-1

1. Included In	When the terms of sale are FOB shipping point, ownership of the goods passes to the buyer when the public carrier accepts the goods from the seller. Therefore, title passed to Ryan's Art on December 27, 2014.
2. Excluded From	When the terms of sale are FOB destination, legal title to the goods remains with the seller until the goods reach the buyer. Therefore, title did not pass to Ryan's Art until January 4, 2015.
3. Excluded From	With shipping terms of FOB shipping point, title passed to O'Toole when the goods were picked up by the common carrier on December 29, 2014.
4. Included In	With shipping terms of FOB destination, title did not pass to Matheson (the buyer) until the goods were received by the buyer which was expected to be January 2, 2015, or later.
5. Included In	Under a consignment arrangement, the holder of the goods (called the consignee) does not own the goods. Ownership remains with the shipper of the goods (called the consignor) until the goods are sold to a customer. Ryan's Art, the consignor, should include merchandise held by the consignee as part of its inventory.
6. Excluded From	Ryan's Art does not own the goods which it holds on consignment. Therefore, these goods should be included in the inventory of the consignor, European Collectibles.