Kari Downs, an auditor with Wheeler & Co., CPAs, is performing a review of Depue Company’s inventory account. Depue did not have a good year, and top management is under pressure to boost reported income. According to its record, the inventory balance at year end was $740,000. Kari prepared the following schedule to document information that was not considered when determining that amount:

Instructions
a. For each of the items identified, indicate whether it should be included, excluded, or has no effect on the year-end inventory balance.
b. Complete the schedule for Kari by calculating the correct inventory balance.

Transcribed Image Text:

Ending inventory - physical count 1. Goods on consignment from Kroeger Corporation were included in the count. 2. Goods shipped FOB destination on December 28 were not included in the count. The goods arrived at Depue's warehouse on January 3. 3. A customer order awaiting pickup on December 31 was not included in the count. The shipping terms on the order were FOB shipping point. The order was shipped to the customer on January 2. 4. A customer order shipped on December 29 was not included in the count. The shipping terms for the order were FOB shipping point. The customer received the order on January 3. Adjusted ending inventory $250,000 40,000 28,000 60,000 $740,000