The balance in Ashwood Company’s accounts payable account at December 31, 2006, was $900,000 before any necessary year-end adjustment relating to the following:
- Goods were in transit from a vendor to Ashwood on December 31, 2006. The invoice cost was $50,000, and the goods were shipped FOB shipping point on December 29, 2006. The goods were received on January 4, 2007.
- Goods shipped FOB shipping point on December 20, 2006, from a vendor to Ashwood were lost in transit. The invoice cost was $25,000. On January 5, 2007, Ashwood filed a $25,000 claim against the common carrier.
- Goods shipped FOB destination on December 21, 2006, from a vendor to Ashwood were received on January 6, 2007. The invoice cost was $15,000.
What amount should Ashwood report as accounts payable on its December 31, 2006 balance sheet?
- $925,000
- $940,000
- $950,000
- $975,000