XYZ Company is a manufacturer of electronic devices. As an auditor, you are examining the company's inventory
Question:
XYZ Company is a manufacturer of electronic devices. As an auditor, you are examining the company's inventory balance for the year ended December 31, 2022. The company's inventory records show the following information:
Beginning inventory: $500,000
Purchases: $1,500,000
Purchase discounts: $50,000
Purchase returns and allowances: $25,000
Freight-in: $20,000
Ending inventory: $600,000
Estimated obsolescence reserve: $60,000
a) Calculate the cost of goods sold for the year ended December 31, 2022. (8 marks)
b) Calculate the gross profit for the year ended December 31, 2022, assuming that the gross profit percentage is 35%. (6 marks)
c) Calculate the net realizable value of the ending inventory after considering the estimated obsolescence reserve. (6 marks)
Auditing and Assurance services an integrated approach
ISBN: 978-0132575959
14th Edition
Authors: Alvin a. arens, Randal j. elder, Mark s. Beasley