XYZ Ltd. is a manufacturer of electronic gadgets. As an auditor, you have been engaged to audit the financial statements of the company for the year ended 31 December 2022. During your audit, you discover that the company has overstated its inventory balance by including obsolete and slow-moving items that should have been written off.

The company's balance sheet shows an inventory balance of $500,000, and the management has estimated that 10% of the inventory is obsolete and should be written off.

Required:

a) Calculate the adjusted inventory balance after considering the audit findings.

b) Discuss the impact of the audit findings on the financial statements and the potential consequences for the company.

c) Provide recommendations on how the company can avoid similar issues in the future.

Answer rating: 100% (QA)

The detailed answer for the above question is provided below a Adjusted inventory balance after considering the audit findings Obsolete inventory 10 x ... View the full answer