Herc Co.’s inventory at December 31, year 2, was
$1,500,000 based on a physical count priced at cost, and before
any necessary adjustment for the following:

• Merchandise costing $90,000, shipped FOB shipping
point from a vendor on December 30, year 2, was received
and recorded on January 5, year 3.

• Goods in the shipping area were excluded from inventory
although shipment was not made until January 4,
year 3. The goods, billed to the customer FOB shipping
point on December 30, year 2, had a cost of $120,000.

What amount should Herc report as inventory in its December
31, year 2 balance sheet?