A company has been experiencing inventory losses due to theft, damage, and spoilage. The auditor is conducting
Question:
A company has been experiencing inventory losses due to theft, damage, and spoilage. The auditor is conducting a physical inventory count and compares it to the inventory balance on the company's books. The auditor found that the physical inventory count is lower than the inventory balance on the books. The auditor decides to estimate the inventory losses for the year based on the difference between the physical inventory count and the inventory balance on the books. If the inventory balance on the books is $500,000, and the physical inventory count is $470,000, what is the estimated inventory loss for the year, and what percentage of the inventory balance on the books does it represent?
Auditing a business risk appraoch
ISBN: 978-0324375589
6th Edition
Authors: larry e. rittenberg, bradley j. schwieger, karla m. johnston