Exercise $4-11$A $($Algo$)$ Effect of inventory losses: perpetual system LO $4-5$

$2\mathrm{.}5$

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Ho Designs experienced the following events during Year $1,$ its first year of operation:

Started the business when it acquired $$85,000$ cash from the issue of common stock.

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Paid $$37,000$ cash to purchase inventory.

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$3.$ Sold inventory costing $$22,000$ for $$43,000$ cash.

$4.$ Physically counted inventory showing $$14,700$ inventory was on hand at the end of the accounting period.

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Required

a$.$ Determine the amount of the difference between book balance and the actual amount of inventory as determined by the physical count.

Difference in book and actual inventory