You encountered the following situations during the December 31, 2020, physical inventory of Latner Shoe Distributing Corp.
a. Latner maintains a large portion of its shoe merchandise in 10 warehouses throughout eastern and central Canada. This ensures swift delivery service for its chain of stores. You were assigned alone to the Halifax warehouse to observe the physical inventory process. During the inventory count, several express trucks pulled in for loading. Although infrequent, express shipments must be attended to immediately. As a result, the employees who were counting the inventory stopped to assist in loading the express trucks. What should you do?
b. (1) In one storeroom of 10 000 items, you test counted about 200 items of high value and a few items of low value. You found no misstatements. You also noted that the employees were diligently following the inventory instructions. Do you think you have tested enough items? Explain.
(2) What would you do if you counted 150 items and found a substantial number of counting errors?
c. In observing an inventory of liquid shoe polish, you noted that a particular lot was five years old. From inspection of some bottles in an open box, you found that the material had solidified in most of the bottles. What action should you take?
d. During your observation of the inventory count in the main warehouse, you found that most of the prenumbered tags that had been incorrectly filled out were being destroyed and thrown away. What is the significance of this procedure, and what action should you take?