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Rachel Warren, an auditor with Laplante CPAS, is performing a review of Pina Colada Corp.'s inventory account. Pina Colada Corp. 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 $773,000, However, the following information was not considered when determining that amount. Prepare a schedule to determine the correct inventory amount. (If an 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 0 if there is no effect.) Ending inventory-as reported 773,000 1. Included in the company's count were goods with a cost of $258,000 that the company is holding on consignment. The goods belong to Harmon Corporation. (258,000) 2. The physical count did not include goods purchased by Pina Colada Corp. with a cost of $30,000 that were shipped FOB destination on December 28 and did not arrive at Pina Colada Corp.'s warehouse until lanuary 3. 3. Included in the inventory account was $17,500 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. (17,500) 4. The company received an order on December 29 that was boxed and 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 $45,000 and a cost of $39,500. The goods were not induded in the count because they were sitting on the dock.

Rachel Warren, an auditor with Laplante CPAS, is performing a review of Pina Colada Corp.'s inventory account. Pina Colada Corp. 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 $773,000, However, the following information was not considered when determining that amount. Prepare a schedule to determine the correct inventory amount. (If an 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 0 if there is no effect.) Ending inventory-as reported 773,000 1. Included in the company's count were goods with a cost of $258,000 that the company is holding on consignment. The goods belong to Harmon Corporation. (258,000) 2. The physical count did not include goods purchased by Pina Colada Corp. with a cost of $30,000 that were shipped FOB destination on December 28 and did not arrive at Pina Colada Corp.'s warehouse until lanuary 3. 3. Included in the inventory account was $17,500 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. (17,500) 4. The company received an order on December 29 that was boxed and 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 $45,000 and a cost of $39,500. The goods were not induded in the count because they were sitting on the dock.

Auditing: A Risk Based-Approach to Conducting a Quality Audit
Auditing: A Risk Based-Approach to Conducting a Quality Audit
10th Edition
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter14: Activities Required In Completing A Quality Audit
Section: Chapter Questions
Problem 90RSCQ
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3. Included in the inventory account was $17,500 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. (17,500) 4. The company received an order on December 29 that was boxed and 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 $45,000 and a cost of $39,500. The goods were not included in the count because they were sitting on the dock. 5. Excluded from inventory was an FOB shipping point sale to Reza Corporation made on December 29, for goods with a selling price of $80,000 and a cost of $67,500. The goods arrived on January 3. Reza had only ordered goods with a selling price of $17,500 and a cost of $9,800. However, a sales manager at Pina Colada Corp. had authorized the shipment and said that if Reza wanted to ship the goods back next week, it could. 57,700 6. Included in the count was $40,500 of goods that were parts for a machine that the company no longer made. Given the high-tech nature of Pina Colada Corp.'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." (40,500) Correct inventory MLAR EYERCISE YIDEO: APPLIED SKILLS
Transcribed Image Text:3. Included in the inventory account was $17,500 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. (17,500) 4. The company received an order on December 29 that was boxed and 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 $45,000 and a cost of $39,500. The goods were not included in the count because they were sitting on the dock. 5. Excluded from inventory was an FOB shipping point sale to Reza Corporation made on December 29, for goods with a selling price of $80,000 and a cost of $67,500. The goods arrived on January 3. Reza had only ordered goods with a selling price of $17,500 and a cost of $9,800. However, a sales manager at Pina Colada Corp. had authorized the shipment and said that if Reza wanted to ship the goods back next week, it could. 57,700 6. Included in the count was $40,500 of goods that were parts for a machine that the company no longer made. Given the high-tech nature of Pina Colada Corp.'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." (40,500) Correct inventory MLAR EYERCISE YIDEO: APPLIED SKILLS
2 Your answer is partially correct. Try again. Rachel Warren, an auditor with Laplante CPAS, is performing a review of Pina Colada Corp.'s inventory account. Pina Colada Corp. 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 $773,000, However, the following information was not considered when determining that amount. Prepare a schedule to determine the correct inventory amount. (If an amount reduces the account balance then enter with a negative sign preceding the number, e.g. -15,000, or parenthesis e.g. (15,000). Eter 0 if there is no effect.) Ending inventory-as reported 773,000 1. Included in the company's count were goods with a cost of $258,000 that the company is holding on consignment. The goods belong to Harmon Corporation. (258,000) 2. The physical count did not include goods purchased by Pina Colada Corp. with a cost of $30,000 that were shipped FOB destination on December 28 and did not arrive at Pina Colada Corp.'s warehouse until January 3 3. Included in the inventory account was $17,500 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. (17,500) 4. The company received an order on December 29 that was boxed and 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 $45,000 and a cost of $39,500. The goods were not included in the count because they were sitting on the dock.
Transcribed Image Text:2 Your answer is partially correct. Try again. Rachel Warren, an auditor with Laplante CPAS, is performing a review of Pina Colada Corp.'s inventory account. Pina Colada Corp. 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 $773,000, However, the following information was not considered when determining that amount. Prepare a schedule to determine the correct inventory amount. (If an amount reduces the account balance then enter with a negative sign preceding the number, e.g. -15,000, or parenthesis e.g. (15,000). Eter 0 if there is no effect.) Ending inventory-as reported 773,000 1. Included in the company's count were goods with a cost of $258,000 that the company is holding on consignment. The goods belong to Harmon Corporation. (258,000) 2. The physical count did not include goods purchased by Pina Colada Corp. with a cost of $30,000 that were shipped FOB destination on December 28 and did not arrive at Pina Colada Corp.'s warehouse until January 3 3. Included in the inventory account was $17,500 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. (17,500) 4. The company received an order on December 29 that was boxed and 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 $45,000 and a cost of $39,500. The goods were not included in the count because they were sitting on the dock.
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