The former CEO of Benton Beverages retired and you have been hired in her place. In reviewing the selected financial data shown below, you are puzzled given that industry information clearly shows that the cost of beverages has been on the rise. As you walk about the warehouse area for the first time, you observe that, as pallets of beverages are being moved to the loading dock, empty areas appear behind various rows. You question the forklift driver, who says that the CEO told him always to leave alternating; empty rows when stacking pallets. You climb a ladder to get a better view of the inventory layout, gasp, climb down, and determine that an emergency report to the board of directors is required.

1. Beginning inventory
2. Purchased during the period
3. Cost of goods sold
4. Year-end adjusting entry
5. Ending inventory
Required:
Incorporating elements of critical thinking on the inside front cover, comment.

Transcribed Image Text:

Years Ended December 31 2014 2013 2012 2011 100% $690,000 Sales $900,000 Cost of goods sold....459,000 100% $640,000 54% 352,000 100%$750,000 100% 2% 372,600 516 390,000 55% Merchandise Inventory Merchandise Inventory Merchandise Inventory Merchandise Inventory 85,000 73,000 63,000 45,000 345,000 396,000 306,000 342,000 312,600 337,600 330,000 332,0003 48,000 85,000 35,000 73,000 20,0004 63,000 63,0004 97,0005