Current Attempt in Progress

Kari Downs, an auditor with Wheeler CPAs, is performing a review of Lily Company's inventory account. Lily did not have a good year,

and top management is under pressure to boost reported income. According to its records, the inventory balance at year$-$end was

$$741,000.$ However, the following information was not considered when determining that amount.

$($a$1)$ Prepare a schedule to determine the correct inventory amount. $($If an amount reduces the account balance then enter with a negative

sign preceding the number, eg$.-15,000,$ or porenthesis eg$.(15,000).$ Enter $0$ if there is no effect.$)$

Ending inventory$-$as reported

Included in the company's count were goods with a cost of $$248,000$ that the company is

holding on consignment. The goods belong to Kroeger Corporation.

The physical count did not include goods purchased by Lily with a cost of $$50,000$ that

were shipped FOB destination on December $28$ and did not arrive at Lily warehouse until

January $3.$

Included in the inventory account was $$20,000$ of office supplies that were stored in the

warehouse and were to be used by the company's supervisors and managers during the

coming year.

The company received an order on December $29$ that was boxed and sitting on the loading

dock awaiting pick$-$up on December $31.$ The shipper picked up the goods on January $1$ and

delivered them on January $6.$ The shipping terms were FOB shipping point. The goods had a

selling price of $$50,000$ and a cost of $$21,000.$ The goods were not included in the count

because they were sitting on the dock

On December $29.$ Lily shipped goods with a selling price of $$79,000$ and a cost of

$$60,000$ to Macchia Sales Corporation FOB shipping point. The goods arrived on January

Macchia had only ordered goods with a selling price of $$14,000$ and a cost of $$8,000.$

However, a sales manager at Lily had authorized the shipment and said that if Macchia

wanted to ship the goods backnext week, it could.

Included in the count was $$38\mathrm{.}000$ of goods that were parts for a machine that the

compary no longer made. Given the high$-$tech nature of Lily's products, it was unlikely that

these obsolete parts had any other use. However, management would prefer to keep them

on the books at cost$,$ "since that is what we paid for them, after all".

Correct inventory