Stone Co. had the following consignment transactions during December 2005:

 Stone Co. had the following consignment transactions during December 2005:

Inventory shipped on consignment to Beta Co.    $18,000
Freight paid by Stone    900
Inventory received on consignment from Alpha Co.    12,000
Freight paid by Alpha    500
No sales of consigned goods were made through December 31, 2005. Stone's December 31, 2005, balance sheet should include consigned inventory at

$12,000
$12,500
$18,000
$18,900

Answer 

$18,900

 You Answered Correctly!
The $18,900 amount to be included in consigned inventory (this would be included in Stone's ending inventory) = $18,000 + $900 freight.

This inventory is owned by Stone. The freight is included because it is a cost necessary to bring the inventory into salable condition and location. The inventory Stone received on consignment is not an asset of Stone's and is not included in Stone's inventory. Stone is helping to sell Alpha's inventory, just as Beta is helping to sell Stone's inventory.