Alpine Ski Co. experienced the following events during Year 1, its first year of operation: 1. Started
Question:
Alpine Ski Co. experienced the following events during Year 1, its first year of operation:
1. Started the business when it acquired $145,000 cash from the issue of common stock.
2. Paid $85,000 cash to purchase inventory.
3. Sold inventory costing $55,350 for $77,500 cash.
4. Physically counted inventory showing $28,000 inventory was on hand at the end of the accounting period.
Required
a. Determine the amount of the difference between book balance and the actual amount of inventory as determined by the physical count.
b. Explain how differences between the book balance and the physical count of inventory could arise. Why is being able to determine whether differences exist useful to management?
Step by Step Answer:
Introductory Financial Accounting for Business
ISBN: 978-1260299441
1st edition
Authors: Thomas Edmonds, Christopher Edmonds