A retailer's physical count of inventory was higher than that shown by the perpetual records. Which of the following could explain the difference?
A)Inventory items had been counted but the tags placed on the items had not been taken off and added to the inventory accumulation sheets.
B)Credit memos for several items returned by customers had not been recorded.
C)No journal entry had been made on the retailer's books for several items returned to its suppliers.
D)An item purchased FOB shipping point had not arrived at the date of the inventory count and had not been reflected in the perpetual records.

Question

Quizplus · Accepted Answer

Credit memos for items returned by customers not being recorded would mean that the perpetual records still show these items as part of inventory, but they are not physically present, leading to a higher physical count than the records indicate.

A Retailer's Physical Count of Inventory Was Higher Than That