Timing of adding raw material purchase to balance sheet

  • Creator
    Topic
  • September 9, 2015 at 10:02 pm #196751
    Anonymous
    Inactive

    So I have a practice problems that I can’t really figure out:

    12/28 – place order with Company A for $60k in raw materials. The terms are net 10 days.

    1/10 – receive the order placed on 12/28. Pay the shipping company $600.

    So when do you record this purchase as part of raw materials? On 12/28, because this is done FOB shipping because the company is the one paying for the shipping so they own the materials once they are shipped? Or when you receive the order on 1/10? I thought it was 12/28, but there isn’t $60k in the raw materials account at year end so clearly I’m missing something.

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