Case Study (2)

Your firm is responsible for auditing the financial statements of Hap Seng Manufacturing Sdn. Bhd for year ended 30^th April 2020. The company operates from a single site. Its sales are RM 5 million and the profit before tax is RM 110, 000. There are no inventory records, so the inventory counts at year end will be used to vakye the inventory in the financial statements. Because Monday, 30^th April is a normal working day, it has been decided that the inventory count should take place on Sunday 29^th April when there is no movement of inventory.

The company has produced the following schedule to determine the value of inventory at 30^th April 2020 from that counted on 29^th April 2020.

Value of inventory counted as at 29/4/ 2020 583, 247 Add Cost of goods received on 30/4/2020 10,969 Production labor on 30/4/2020 3,260 Overheads relating to labor at 120% 3,912 18,141 Less Cost of sales on 30/4/2020 (36, 740) Value of inventory at 30/4/2020 564, 648