Analytical Procedure - Laramie Wire Manufacturing Essay

The process requires Peyton Approved to discover how much inventory is sold and what the cost of goods will result in. The process requires the business to review three forms of merchandise inventory to determine which summary benefits the business’s operational behavior. One will discover when assuming that first inventory purchased by the store is the first to be sold, it is determined that the FIFO method displays the best financial outcome for the business. During the process of updating journal entries, one must enter the information proved appropriately into the T-accounts to add the balance under each record. Once the T-accounts for transactions and adjusted transactions are balanced, the next step is to enter the information provided on the balance sheet. The balance sheet will list Peyton Approved assets, liabilities and stockholders equity after added during the T-account process (Nobles, 2014). Once the balance sheet is completed the income statement, statement of retained earnings, and closing entries can be filled with the information proved. This will give the business a full review from journal entry to closing entries of the business for the six month accounting

In the summary of significant accounting policies, what is The Buckle's procedure in accounting for inventory?

I would be present at the year-end inventory because the inventory count is done by in-house personnel. SAS 1 now requires auditors to satisfy themselves about the effectiveness of the client's methods of counting inventory and the reliance they can place on the client's representation about the quantities and physical condition of the inventory. As an auditor, I must:

Analytical procedures should be applied to the determination of commission that is being paid to Smackey salespeople. The commissions on the average are off by 11 percent showing that they may not be reasonable. The auditors also need to perform the analytical procedures for inventory to determine if the inventory is being misstated. This would be a concern due to the amount of waste and returns. The test of details of balances will need to be done on the accounts receivables to determine if they are properly stated.

2. Focus specifically on each of the five management assertions (existence or occurrence, completeness, valuation or allocation, rights and obligations, and presentation and disclosure) for the inventory account. Focus specifically on each of the five management

In the early 1980 the consumer electronics industry was growing at an explosive pace. Between the 1981 and 1984 the total sales for the industry doubled. To support increasing sales massive amounts of inventory has to be procured, marked up and sold to consumers. Inventory becomes the biggest asset a retailer has. As part of the audit planning processes the inspection of the inventory system and verification of the actual inventory numbers should have been a priority. Crazy Eddie was able to inflate its financial results by fraudulently altering its inventory counts and was able to conceal these activities from the auditors for several years.

The firm’s accounts receivable ratio increased from 68.71 in 2006 to 74.56 in 2010. This means that it is taking Abbott almost six days longer to collect from its customers today than it did five years ago. Furthermore, the firm’s accounts payable days has decreased from 43.72 in 2006 to 38.22 in 2010. This means that Abbott is paying its suppliers 5½ days earlier today than it did in 2006. A change in the inventory ratio from 8.01 in 2006 to 11.03 in 2010 indicates that it is taking the firm longer to sell finished goods than it used to. The increase in the accounts receivable and inventory ratios, combined with a decrease in the accounts payable ratio, indicates poor working capital management and helps to explain why the firm has increased its holdings of cash and short-term investments. To correct this, Abbott’s managers should focus on collecting cash from its customers faster and delaying payments to its suppliers. To maximize its cash position, the firm would be best served by paying its suppliers in the same amount of time as it collects payment from its customers.

Second, the classification in inventory management is still inaccurate. That results in some problems such as: the severe lack of some products which are in growing demand (1 inch valve series 230), the redundancy making storage expenses go up and the stagnancy in storage area (to products like gear driven rotary and monitor controller)

In the circumstances of Auditing Alchemy, the narrative stated that the organization has not performed a physical count of inventory in quite sometime; with management having uneasy feelings about organizational profitability and performance, a physical inventory count may provide additional insight into any potential inventory issues.

When engaged in auditing a public firm, such as Apollo Shoe Inc., an auditor must determine when to trust in the company’s internal controls and when to ascertain auxiliary testing methods are obligatory to analyze control risks. The sales and collection cycle is rather a substantial fraction of the audit because this unique segment employs a multitude of documentation and records ranging anywhere from customer and sales orders, shipping documents, credit memos, and general journal entries; therefore, a working

Work-in-process inventory. Merchandising and manufacturing inventory accounts. Perpetual inventory system. Determining when title passes. Inventory errors. Overstatement of purchases and ending inventory. Period vs. product costs. Reporting Purchase Discounts Lost. Cost flow assumption. FIFO periodic vs. perpetual system. Purchase commitments. Using LIFO for reporting purposes. LIFO liquidation. LIFO liquidations. Dollar-value LIFO Dollar-value LIFO method.

The problem faced by the company is they do not have any systematic system to record and keep their inventory data. It is difficult for the admin to record the inventory data quickly and safely because they only keep it in the logbook and not properly organized.

The finance department will also monitor levels of lost and outdated inventory to make sure that the levels don’t become too high. They need to write off this inventory but has to make sure that it isn’t excessive. Finance people also monitor the counts or physical inventories in order to reconcile what is actually on hand with what has been recorded in the company’s records. The finance department does not manage the inventory personally but it does have to make sure that the people

Inventory participates as a main character in the setup of many businesses and manufacturing firms. In production, inventories of natural resources permit enterprises to function autonomously of their sources of provisions. Daily processes are not reliant on transports from supplies hence the reserve of the essential materials is preserved and used as required. Lacking inventory control, millions of dollars could be lost a year as of non-accountability of supplies and imprecise checks and balances. The practice of control and administration of inventory is an important aspect of the success or failure of any business (H. Quesada-Pineda, n.d).

Inventory management of the company is highly effective. Modern techniques of inventory management like Economic Order Quantity (EOQ), ABC analysis, maximum and minimum level of inventory, CPM / PERT etc. are followed in a routine way.Monthly requirements for working capital are about 10 cores of Taka, these are collected both from internal and external sources. Cash credit facilities are given by National Commercial Banks (NCBs) at a lower rate of interest. The forecast of working capital is done through estimating monthly productions, needs for raw materials, and other direct expenses. The major elements of working capital are inventory, debtors, cash balances and short term investments. Inventories are grouped into raw materials, work in process, finished goods, stores and spares etc.(Md. Sayaduzzaman, dec-2006, “Working Capital Management: A Study on British American Tobacco Bangladesh Company Ltd” The