Question

The purchasing manager, Eve, reports the following information regarding inventory for the the month of March: Beginning inventory $12,000, Purchases of inventory for $38,000. The perpetual inventory system indicates that inventory costing $35,210 was sold during March for $44,000. Eve counts the physical inventory on March 31st and finds that inventory costing $14,300 is actually on hand at month-end. What amount of shrinkage will Mandy Company report for March?

Answer 1

Answer:

$490

Explanation:

For computing the amount of shrinkage first we have to find out the ending inventory which is shown below:

= Beginning Inventory + Purchases - Inventory Sold

= $12,000 + $38,000 - $35,210

= $14,790

Now

Actual Ending Inventory = $14,300

So,

Shrinkage amount is = Ending Inventory as per Book Value – Actual Ending Inventory

= $14,790 - $14,300

= $490