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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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The retail inventory method indicated an inventory value of $80,000. A physical inventory indicated a value of $70,000. Suggest possible causes of this discrepancy.

To determine

Suggestion for the possible causes for the said discrepancy.

Explanation

The retail inventory method is an estimate made to the inventory, thus there will be discrepancy may likely to occur. First reason would be the breakage of the inventory or theft of the inventory and that will not be reflected in the cost-to-retail ratio but it affects the actual physical inventory. Second reason would be using of one or more assumptions made to the retail inventory and that will not be true...

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