McLaughlin Inc. began business in the current month. The bookkeeper received a report from an outside firm specializing in physical inventory counts that the ending inventory was $1,426.60. However, according to the bookkeeper's records, the inventory at month end was $1,517.50. The bookkeeper has rechecked his records several times and still comes up with the same amount. He believes that the difference between the two amounts must be due to inventory shrinkage. The company had no inventory at the beginning of the month and 70 units on hand per a physical inventory count at the end of the month. The company uses the periodic method. Listed below are the company's purchases for the month: Instructions
Write an explanation for the bookkeeper on how the difference in amounts could occur. (Hint: use different cost formulas to calculate the ending inventory). Provide numerical support.

Question

McLaughlin Inc. began business in the current month. The bookkeeper received a report from an outside firm specializing in physical inventory counts that the ending inventory was $1,426.60. However, according to the bookkeeper's records, the inventory at month end was $1,517.50. The bookkeeper has rechecked his records several times and still comes up with the same amount. He believes that the difference between the two amounts must be due to inventory shrinkage. The company had no inventory at the beginning of the month and 70 units on hand per a physical inventory count at the end of the month. The company uses the periodic method. Listed below are the company's purchases for the month:  Instructions
Write an explanation for the bookkeeper on how the difference in amounts could occur. (Hint: use different cost formulas to calculate the ending inventory). Provide numerical support.

Quizplus · Accepted Answer

The Answer of McLaughlin Inc. began business in the current month. The bookkeeper received a report from an outside firm specializing in physical inventory counts that the ending inventory was $1,426.60. However, according to the bookkeeper's records, the inventory at month end was $1,517.50. The bookkeeper has rechecked his records several times and still comes up with the same amount. He believes that the difference between the two amounts must be due to inventory shrinkage. The company had no inventory at the beginning of the month and 70 units on hand per a physical inventory count at the end of the month. The company uses the periodic method. Listed below are the company's purchases for the month:  Instructions
Write an explanation for the bookkeeper on how the difference in amounts could occur. (Hint: use different cost formulas to calculate the ending inventory). Provide numerical support.