(MODIFIED) During 2020, Reliable Hardware Store had the following selected accountsand balances:Php 6,000,0004,100,000200,000Net SalesNet PurchasesBeginning InventoryThe 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:A. Compute the inventory shrinkage.B. The owner of the business believes that the inventory shrinkage was due toshoplifting and intends to hire a security guard with a monthly salary of Php 10,000to once and for all stop this practice. Is this a wise decision? Explain. Is there analternative solution and when should this plan of action be adopted?

Inventory shrinkage refers to excess inventory that was recorded in the accounting records but is no…

Answered: MODIFIED) During 2020, Reliable Harde…

MODIFIED) During 2020, Reliable Harde nd balances: Net Sales Net Purchases Beginning Inventory he physical count of inventory on hand at eliable had consistently followed its polic

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 33BE

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Question

(MODIFIED) During 2020, Reliable Hardware Store had the following selected accounts
and balances:
Php 6,000,000
4,100,000
200,000
Net Sales
Net Purchases
Beginning Inventory
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:
A. Compute the inventory shrinkage.
B. 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?

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