Reference no: EM133150084
Question - You are auditing the inventory balance of Subway Corp. for the year ended December 31, 2021. Since the assessment of control risk over inventories was at below the maximum, you decided to render your inventory count observation at an interim date (September 30) rather than at the balance sheet date. The following information from the client records are deemed relevant for your year-end balances audit:
|
Inventory per counts (September 30)
|
532,000
|
|
Purchases for 9 months (up to September 30)
|
4,010,415
|
|
Purchases for 12 months (up to December 31)
|
5,201,000
|
|
Total collections from customers for 9 months (up to September 30)
|
6,400,000
|
|
Additional collections from October to December
|
2,100,000
|
|
Inventory (January 1)
|
490,000
|
|
Accounts receivable, January 1
|
642,000
|
|
Accounts receivable, September 30
|
471,000
|
|
Accounts receivable, December 31
|
545,000
|
Audit notes:
1. P25,000 worth of goods received on September 29 were recorded as purchases in October.
2. P34,000 worth of goods were in transit as of September 30 were recorded as purchase in October but were under FOB shipping point terms.
3. P18,000 worth of goods were in transit as of September 30 were recorded as purchase in September and were under FOB shipping point terms.
4. P20,000 cash advance to suppliers in September were recorded as purchases in September. Goods however were delivered only in January of the following year.
5. December sales included P300,000 sales to employees which was net of a P200,000 total employee discount.
Required - What is the adjusted inventory balance as a result of your cut-off as of September 30?