Question: Auditors are examining the accounts of Acton Retail Corporation They

Auditors are examining the accounts of Acton Retail Corporation. They were present when Acton’s personnel physically counted the Acton inventory; however, the auditors made their own tests. Acton’s records provided the following data for the current year:

Inventory at 31 December (per physical count valued at retail) = $ 475,000

1. Compute the ending inventory at lower of cost or NRV as an audit test of the overall reasonableness of the physical inventory count.
2. Note any discrepancies indicated. What factors should the auditors consider in reconciling any difference in results from the analysis?
3. What accounting treatment (if any) should be accorded thediscrepancy?

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  • CreatedFebruary 17, 2015
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