Question

Farley Bains, an auditor with Nolls CPAs, is performing a review of Wildhorse Co.'s Inventory account. Wildhorse did not have a good
year, and top management is under pressure to boost reported income. According to its records, the inventory balance at year-end was
$773,590. However, the following information was not considered when determining that amount.

Prepare a schedule to determine the correct inventory amount. (Show amounts that reduce inventory with a negative sign or
parenthesis e.g.-45 or parentheses e.g. (45).)

Ending inventory-as reported
1.
Included in the company's count were goods with a cost of $212,350 that the
company is holding on consignment. The goods belong to Nader Corporation.

2.
The physical count did not include goods purchased by Wildhorse with a cost
of $39,190 that were shipped FOB shipping point on December 28 and did
not arrive at Wildhorse's warehouse until January 3.

3.
Included in the Inventory account was $17,590 of office supplies that were
stored in the warehouse and were to be used by the company's supervisors
and managers during the coming year.

4.
The company received an order on December 29 that was boxed and was sitting on the loading dock awaiting pick up on December 31 the shipper picked up the goods on January 1 and delivered them on January 6 the shipping terms were FOB shipping point the goods had a selling price of $40,660 and a cost of $31,430 the goods were not included in the count because they were sitting on the dock.

5.
Included in the count was $47,100 of goods that were parts for a machine that the company no longer made given the high-tech nature of wild horses products it was unlikely that these obsolete parts had any other use however management would prefer to keep them on the books at cost since that is what we paid for them after all.

Correct Inventory:

Answer 1

Answer:

Ending inventory: 773,590

1. (212,350)

2. 39,190

3. (17,590)

4. 31,430

5. (47,100)

Correct inventory : 567,170