Inventory Estimation (MODIFIED) During 2020, Reliable Hardware Store had the following selected accounts and balances: Net Sales Php 6,000,000 Net Purchases 4,100,000 Beginning Inventory 200,000 The physical count of inventory on hand at December 31, 2020 amounted to Php 240,000. Reliable had consistently followed its policy of having a 50% mark-up on cost. REQUIRED: 1. Compute the inventory shrinkage. 2. The owner of the business believes that the inventory shrinkage was due to shoplifting and intends to hire a security guard with a monthly salary of Php 10,000 to once and for all stop this practice. Is this a wise decision? Explain. Is there an alternative solution and when should this plan of action be adopted?
Inventory Estimation (MODIFIED) During 2020, Reliable Hardware Store had the following selected accounts and balances: Net Sales Php 6,000,000 Net Purchases 4,100,000 Beginning Inventory 200,000 The physical count of inventory on hand at December 31, 2020 amounted to Php 240,000. Reliable had consistently followed its policy of having a 50% mark-up on cost. REQUIRED: 1. Compute the inventory shrinkage. 2. The owner of the business believes that the inventory shrinkage was due to shoplifting and intends to hire a security guard with a monthly salary of Php 10,000 to once and for all stop this practice. Is this a wise decision? Explain. Is there an alternative solution and when should this plan of action be adopted?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 71APSA: Effects of an Inventory Error The income statements for Graul Corporation for the 3 years ending in...
Related questions
Question
Inventory Estimation
(MODIFIED) During 2020, Reliable Hardware Store had the following selected accounts and balances:
| Net Sales |
Php 6,000,000 |
| Net Purchases |
4,100,000 |
| Beginning Inventory | 200,000 |
The physical count of inventory on hand at December 31, 2020 amounted to Php 240,000.
Reliable had consistently followed its policy of having a 50% mark-up on cost.
REQUIRED:
1. Compute the inventory shrinkage.
2. The owner of the business believes that the inventory shrinkage was due to
shoplifting and intends to hire a security guard with a monthly salary of Php 10,000
to once and for all stop this practice. Is this a wise decision? Explain. Is there an
alternative solution and when should this plan of action be adopted?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning