LMB Inc. retail store recently had a fire at its location in downtown Mississauga. As part of
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Question:
The owner called the bookkeeper after receiving this information and indicated "there's an error in the inventory estimate of $300,000 at the time of the fire. The pricing all year has been carefully controlled to provide an average gross margin of 47.5% and I know the sales are correct"
Required
a) Assuming that the owner's statement is correct, provide a revised calculation to show how much the ending inventory should have been.
b) Assume instead that the bookkeeper was correct in her calculation. Provide two reasons why there may be a difference between the amount reported and the amount the owner was anticipating (limit your discussion in part (b) to one sentence each. If more than two reasons are provided, only the first two will be marked).
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date: