An auditor observed Bizarre Costume Shop's physical inventory count on the last day of the client's...
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An auditor observed Bizarre Costume Shop's physical inventory count on the last day of the client's fiscal year, October 31, 2020. In addition to being somewhat disturbed by the costumes, the auditors identified several variances in the test counts relative to the client's recorded inventory. Through inquiry, YBBD obtained explanations from the client's management. Required: For each variance listed and client response, select the audit response the auditor would most likely make from the list of possible responses. Each response may be used once, more than once, or not at all. Write only the letter of the response in the space provided. Possible audit responses: a. Inspect supporting documents and agree quantities received to purchase order. b. Inspect supporting purchase documents for proper shipping terms and receiving information to verify exclusion from inventory count. c. Inspect supporting purchase documents for proper shipping terms and receiving information to verify inclusion in inventory count. d. Inspect supporting sale and shipment documentation for proper shipping terms for exclusion in inventory count. e. Inspect supporting sale and shipment documentation for proper shipping terms for inclusion in inventory count. f. Request that client make appropriate correction to record additional inventory. g. Request that client make appropriate correction to reduce inventory. Recorded Test Count Auditor Response (letter) Auditor's Inventory Item Inventory Quantity Variance Client Explanation Test Count Number Inventory in transit shipped f.o.b. shipping point, received 11/2/2020 Inventory sold to customer f.o.b. destination; not received by customer until 11/2/2020 Sale recorded based on customer request to hold items. Customer has not paid or picked items up yet Inventory received 10/30/2020; vendor shipment receipt not recorded. Inventory was separated for an 11/1/2020 sale; held on dock for customer pickup. SpiderHorse 175 (50) 1 125 Unibrow Man 850 715 (135) Werewolf WonderWoman 200 225 25 Hairy Potter 455 45 500 Rainbow Unicorn (100) 650 550 E 3. 5. An auditor observed Bizarre Costume Shop's physical inventory count on the last day of the client's fiscal year, October 31, 2020. In addition to being somewhat disturbed by the costumes, the auditors identified several variances in the test counts relative to the client's recorded inventory. Through inquiry, YBBD obtained explanations from the client's management. Required: For each variance listed and client response, select the audit response the auditor would most likely make from the list of possible responses. Each response may be used once, more than once, or not at all. Write only the letter of the response in the space provided. Possible audit responses: a. Inspect supporting documents and agree quantities received to purchase order. b. Inspect supporting purchase documents for proper shipping terms and receiving information to verify exclusion from inventory count. c. Inspect supporting purchase documents for proper shipping terms and receiving information to verify inclusion in inventory count. d. Inspect supporting sale and shipment documentation for proper shipping terms for exclusion in inventory count. e. Inspect supporting sale and shipment documentation for proper shipping terms for inclusion in inventory count. f. Request that client make appropriate correction to record additional inventory. g. Request that client make appropriate correction to reduce inventory. Recorded Test Count Auditor Response (letter) Auditor's Inventory Item Inventory Quantity Variance Client Explanation Test Count Number Inventory in transit shipped f.o.b. shipping point, received 11/2/2020 Inventory sold to customer f.o.b. destination; not received by customer until 11/2/2020 Sale recorded based on customer request to hold items. Customer has not paid or picked items up yet Inventory received 10/30/2020; vendor shipment receipt not recorded. Inventory was separated for an 11/1/2020 sale; held on dock for customer pickup. SpiderHorse 175 (50) 1 125 Unibrow Man 850 715 (135) Werewolf WonderWoman 200 225 25 Hairy Potter 455 45 500 Rainbow Unicorn (100) 650 550 E 3. 5.
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Test count number Auditor Response Explanation 1 C Inventory is already in Transit and recei... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
Posted Date:
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