Tri-State Bank and Trust is considering giving Josef Company a loan.

Tri-State Bank and Trust is considering giving Josef Company a loan. Before doing so,management decides that further discussions with Josef’s accountant may be desirable. One areaof particular concern is the inventory account, which has a year-end balance of $297,000.Discussions with the accountant reveal the following.1. Josef sold goods costing $38,000 to Sorci Company, FOB shipping point, on December 28.The goods are not expected to arrive at Sorci until January 12. The goods were not included inthe physical inventory because they were not in the warehouse.2. The physical count of the inventory did not include goods costing $95,000 that were shippedto Josef FOB destination on December 27 and were still in transit at year-end.3. Josef received goods costing $22,000 on January 2. The goods were shipped FOB shippingpoint on December 26 by Solita Co. The goods were not included in the physical count.4. Josef sold goods costing $35,000 to Natali Co., FOB destination, on December 30. The goodswere received at Natali on January 8. They were not included in Josef’s physical inventory.5. Josef received goods costing $44,000 on January 2 that were shipped FOB destination onDecember 29. The shipment was a rush order that was supposed to arrive December 31. Thispurchase was included in the ending inventory of $297,000.