Jon Johnson, an accountant with a local CPA firm, has just completed an inventory count for Mom
Question:
These three inventory analysis methods have resulted in three very different answers, which are summarized in the following table:
Method Inventory Value
Inventory count ........................................................... $ 98,500
Gross margin analysis ................................................... 119,750
Point-of-sale scanners ................................................... 111,500
In evaluating the results, Jon and Don are curious as to why the three methods result in such large differences. Since the inventory count reports actual inventory on hand, they begin to wonder if Mom and Pop have an inventory theft problem. Write a short memo explaining why the other two methods, gross margin analysis and point-of-sale scanners, can result in significantly different answers without there being a theft problem.
Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Related Book For
Financial Accounting
ISBN: 978-0324645576
10th edition
Authors: W. Steve Albrecht, James D. Stice, Earl K. Stice
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