Explain the need for taking a physical inventory at the end of the year.

Expert Solution

ekkarill92 answered 7 months ago

The company takes a physical inventory count at the end of the year and adjusts their...

The company takes a physical inventory count at the end of the year and adjusts their inventory and cost of goods sold if there is a difference between the inventory value determined from the actual count compared to the value in the general ledger. The information below includes the number of units counted in inventory at the end of the year and the purchases of inventory during the month. Number of units held in the company's inventory at 12/31/2016 based...

A physical inventory taken at year end indicated that there was $125,000 on hand. The Estimated...

A physical inventory taken at year end indicated that there was $125,000 on hand. The Estimated Returns Inventory is $8,200. Depreciation for the year is $24,500. On December 31, the close of the fiscal year, the balances of selected accounts appearing in the ledger of Broxton Gallery, an art retailer, are as follows: Accumulated Depr.-Building $365,000 Inventory $115,000 Administrative Expenses 440,000 Notes Payable 100,000 Building 810,000 Purchases 810,000 Retained Earnings 455,000 Purchases Returns and Allowances 2,500 Cash 78,000 Sales...

Year-end adjustment information: (a, b) A physical count shows that merchandise inventory costing $86,000 is on...

Year-end adjustment information: (a, b) A physical count shows that merchandise inventory costing $86,000 is on hand as of December 31, 20--. (c, d, e) Young estimates that customers will be granted $5,600 in refunds of this year’s sales next year and the merchandise expected to be returned will have a cost of $4,300. (f) Supplies remaining at the end of the year, $3,300. (g) Unexpired insurance on December 31, $3,800. (h) Depreciation expense on the building for 20--, $10,500....

At the end of the period, a physical inventory count of goods actually in the warehouse...

At the end of the period, a physical inventory count of goods actually in the warehouse showed that West, Inc. had $65,000 of goods on hand.West had $24,000 of goods out on consignment with a customer (West is the consignor) and $17,000 of goods on consignment from a vendor (West is the consignee). West had a purchase order (West is the buyer) for$8,000 of inventory (FOB destination) that was still in transit.Finally, West had sold $6,500 of inventory (FOB destination)...

Buffalo’s Motors had the following inventory situations to consider at its December 31 year end. Physical...

Buffalo’s Motors had the following inventory situations to consider at its December 31 year end. Physical inventory count was $15,600. 1. Pete’s Propellers had $1,000 of goods held on consignment that were included in Buffalo’s physical inventory count. 2. Goods that cost $980 were sold to Walter’s Wings and shipped FOB destination on December 28. The goods were not expected to arrive at Walter’s until January 4. These goods were not included in the physical inventory count. 3. Goods purchased...

The Sheffield Company has just completed a physical inventory count at year end, December 31, 2022....

The Sheffield Company has just completed a physical inventory count at year end, December 31, 2022. Only the items on the shelves, in storage, and in the receiving area were counted and costed on the FIFO basis. The inventory amounted to $75,500. During the audit, the independent CPA discovered the following additional information: (a) There were goods in transit on December 31, 2022, from a supplier with terms FOB destination, costing $10,500. Because the goods had not arrived, they were...

he Monty Company has just completed a physical inventory count at year end, December 31, 2022....

he Monty Company has just completed a physical inventory count at year end, December 31, 2022. Only the items on the shelves, in storage, and in the receiving area were counted and costed on the FIFO basis. The inventory amounted to $81,600. During the audit, the independent CPA discovered the following additional information: (a) There were goods in transit on December 31, 2022, from a supplier with terms FOB destination, costing $9,800. Because the goods had not arrived, they were...

ABC Hotel is a 390-room economy hotel in downtown St. Louis. After taking physical inventory of...

ABC Hotel is a 390-room economy hotel in downtown St. Louis. After taking physical inventory of the laundry chemicals on May 31st, the assistant controller found that: In the Main Storeroom 15 cases of detergent at $90 each 15 cases of neutralizer at $65 each 16 cases of softener at $31 each 7 pails of bleach at $7.50 each 1 bucket of starch at $13.50 each In the Laundry Room 5.75 cases of detergent 2.25 cases of neutralizer 8.50 cases...

During the taking of its physical inventory on December 31, 20Y3, Kate's Interiors Company incorrectly counted...

During the taking of its physical inventory on December 31, 20Y3, Kate's Interiors Company incorrectly counted its inventory as $123,800 instead of the correct amount of $132,465. Indicate the effect of the misstatement on Kate's Interiors's December 31, 20Y3, balance sheet or income statement for the year ended December 31, 20Y3. For each, select if the amount is overstated or understated. Then, input the over or under amount, entered as a positive value. Cost of goods sold Current assets Gross...

Q3. Explain the importance of observing physical inventory during an audit.

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