23.jCost flow model. Franklin, LLP, an auditing firm, is reconstructing the reco

Question

23.jCost flow model. Franklin, LLP, an auditing firm, is reconstructing the records of a client called MultiChips, which is concerned that some of its inventory is missing. The accounting records provide the following information about MultiChips' inventories: Product Computer Chips Potato Chips Poker Chips 600,000 1,500,000 1,800,000 $160,000 600,000 500,000 $ 60,000 200,000 180,000 Transfers out of inventory accounts from sales...... You physically counted the ending inventory and found it to be as follows: computer chips, $600,000; potato chips, $240,000; and poker chips, $50,000. Compute the ending inventory according to the accounting records and compare it to the physical count What discrepancy do you find between the physical count and the accounting records, i an

Explanation / Answer

Particulars Computer Chips Potato Chips Poker Chips Beginning inventory           6,00,000.00    1,60,000.00      60,000.00 Transfers into inventory accounts         16,00,000.00    6,00,000.00 2,00,000.00 Transfers out of inventory accounts from sales         18,00,000.00    5,00,000.00 1,80,000.00 Ending inventory( Beg Inv+transfer in-tarnsfers out)           4,00,000.00    2,60,000.00      80,000.00 Inventory as per physical count - Given in question           6,00,000.00    2,40,000.00      50,000.00 Difference         -2,00,000.00       20,000.00      30,000.00 Comments Excess Inventory identified Missing inventory Missing inventory

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