Question

Exercise 6-2 Kari Downs, an auditar with Wheeler CPAs, is performing a rviw af Depue Company's inventary account. Depue did not have a good yoar, and top management is under pressure to boost reported income. Accarding ta its records, the inventary balance at year-end was $763,000. However, the following infarmation was not considered when determining that amount. Prepare a sthedule to determine the carrect inventory amount. (Ifan amount reduces the account balance then enter with a negative sign preceding the number, e.g. -15,000, or parenthesis e.g. (15,000). Enter O if there is no effect.) Ending inventary-as reported 1. Included in the company's count were goads with a cost of $239,000 that the company is holding on consignment. The goods belong to Kroeger Corporation 2. The physical count did not include goods purchased by Depue with a cost of $31,000 that were shipped becember 28 and did FOB destination on Decenber 23 and did not arrive at Depue warehouse until lanuary 3. 3. Included in the inventory account was $25,000 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 sitting on the loading dock awaiting pick-up an December 31. The shipper picked up the gaads a January 1 ad delivered them on lauary 6 The shipping terms were FOB shipping paint. The goods had a selling price of $46,000 and a cost of $34,000. The goods were not included in the count because they were sitting on the dock. On December 29, Depue shipped goods with a selling price of $,000 and a cost of $53,000 to Macchia Sales Corporation FOB shipping point. The goods arrived on January 3. Macchia Sales had only ordered goods with a selling price of $14,000 and a cost of 3,000. However, a sales manager at Depue had authorized the shipment and said that if Macchia wanted to ship the goods back next week, it could. 5. 6. Included in the cournt was $49,00D of goads that were parts far a machine that the carripany na langer had any made. Glven the high-tech nature of Depue's 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. Comect inventory

Answer 1

Ending inventory as reported	763000
1	-239000	Not to be included
2	0	Correctly not included
3	-25000	Not to be included
4	34000	To be included
5	45000	=53000-8000
6	-49000
Correct inventory	529000