Question: Nackawic Ltd Nackawic imports novelty items from China and sells

Nackawic Ltd. (Nackawic) imports novelty items from China and sells them to dollar stores, novelty shops, and other low-price retailers in eastern Canada. Recently, the manager of Nackawic's warehouse in Fredericton became concerned that a significant amount of goods were being stolen from the warehouse. He wanted to know the extent of the problem so he could take remedial steps, if necessary. He spoke with the company accountant, who told him that if he counted the inventory on hand she could give him an idea of how much inventory was being stolen.
The manager closed the warehouse and had the inventory counted. He advised the accountant that there was $3,066,896 of inventory on hand on the date of the count. The manager also told the accountant that since the last year-end, goods costing $15,688 had been damaged and had to be thrown away. The accountant examined the financial records pertaining to the Fredericton warehouse and found that since the last year-end, goods costing $1,244,550 had been purchased and stored in the warehouse, and that goods costing $1,319,320 had been shipped to customers over the same period. The inventory count at the end of the previous reporting period reported inventory of $3,279,706.

a. Estimate the amount of novelty items that might have been stolen from the Fredericton warehouse.
b. Is it possible to conclude with certainty the amount you calculated in (a) was due to theft? Explain.
c. Why was it necessary to count the inventory to estimate the amount of inventory that was stolen?

View Solution:

Sale on SolutionInn
  • CreatedFebruary 26, 2015
  • Files Included
Post your question