Suppose, after graduating, that you accept a job as a manager for a retail store that sells tablets and laptop computers, along with cases and bags for them. The inventory is purchased from other countries and is subject to currency fluctuation.
Instructions
(a) Identify some control measures that you think should be in place in your store to safeguard the inventory.
(b) Assume the store uses a perpetual inventory system. Do you think that taking a physical inventory count once a year is adequate? If not, how often do you think a physical inventory count should be taken? Identify any accounts that would be affected by an adjusting journal entry to update the inventory for any shortages or overages.
(c) Which cost formula would you recommend that the store use? Why? Would you recommend that the store use the same cost formula for all types of inventory the store carries? Why or why not?