Compact Computers, Inc. manufactures and sells personal computers through various retail distributors.  The company took a physical inventory as of December 31, 2019, and adjusted its perpetual records to agree with the physical inventory, by debiting “Computers” and crediting “Cost of Goods Sold.”  The following is a summary of postings to the “Computers” and “Cost of Goods Sold” accounts:

		Inventory – Computers
		Debits	Credits
1/2/2019	Balance	120,000		1/2/19-12/31/19
1/2/19-12/31/19		2,300,000	2,000,000
12/31/19 AJE		80,000
		Cost of Goods Sold – Computers
		Debits	Credits
1/2/19-12/31/19		2,000,000	80,000	AJE 12/31/2019

 Compact sells all computers at cost plus 30% of the cost.  In auditing the finished goods inventory, Tracy Jordan obtained the following additional information:

1. Included in 2019 sales were 100 computers sold to Max Depot on 12/31/19 and shipped FOB destination. The computers were excluded from Compact’s 12/31/19 physical inventory and were received by Max Depot on 1/3/20.  The selling price was $1,300 per computer.
2. En route to Compact Computers on 12/31/19 were 20 computers sold to Circuit Town in November and found to be defective. Compact Computers pays for freight charges on all returns.  Although the computers were on Compact’s railroad siding on December 31, they were not included in the 12/31/19 physical inventory and the return was not recorded until 1/2/20.  The computers were originally sold to Circuit Town for $1,820 each.  With minor rework, the computers should be fully saleable again.  The reimbursable freight charges paid by Circuit Town were $430.
3. Compact manufactured 150 computers to order under a private label for Rears & Sawbuck. The computers were completed on 12/28/19 and were placed in the loading area awaiting pickup by Rears & Sawbuck’s truck (FOB Destination).  The selling price of the computers was $1,560 each.  The sale was recorded in 2019, and the computers were included in the 12/31/19 inventory.

Required:

1. Draft necessary audit adjustments based on the above information.
2. Calculate the corrected amount of Compact’s 12/31/19 inventory of computers.

Answer rating: 100% (QA)

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