1000008948_09_05_2024_21_34

.jpg

School

Rochester Institute of Technology *

*We aren’t endorsed by this school

Course

490

Subject

Industrial Engineering

Date

May 11, 2024

Type

jpg

Pages

1

Uploaded by gnarly000

6. Your client, Ridgewood Heating and Cooling, specializes in residential air conditioning and heating installations. The company maintains an inventory of air conditioning units, furnaces, and air handling ductwork. The client has provided the following selected financial statement information for the year ending December 31, 2019: 4(Click the icon to view the financial information.) ' Following is a breakdown of the ending i Decembgr Sresn ending inventory account as of >(Click the icon to view the inventory information.) Ridgewood stores inventory in a 100,000 square foot warehouse facility at a location different from its corporate office. 8(Click the icon to view the additional information.) Read the requirements’. Review Only Click the icon to see the Worked Solution. Requirement a. Design substantive analytical procedures to evaluate the reasonableness of the ending inventory account. Complete the table below to evaluate the reasonableness of the ending inventory account. (Round your answers to two decimal places XXX.) Number of : Units Per Unit Total Square B Units on Requiring Required Sq. Footage Required Inventory Description hand Ending Balance Floor Space Footage to Store Inventory AC Unit - Model 635 1,240 $ 806,000 413.33 16 6,613.33 AC Unit - Model 770 1,733 1,940,960 577.67 16 9,242.67 Furnace- Model 223 1,992 2,589,600 996.00 16 15,936.00 Furnace - Model 225 2,008 2,761,000 1,004.00 ‘ 16 16,064.00 Air handling ducts 11,883 1,485,400 2,970.75 25 74,268.75 122,124.75 Total $ 9,682,960 Requirement b. What concerns, if any, do you have about the ending inventory at Ridgewood Heating and Cooling? The above substantive analytical procedure suggests that inventory may be significantly overstated. The amount of square footage that would be needed to store the stated amount of inventory is approximately 22% greater than the amount of square footage available in the warehouse facility. The auditor would need to design further substantive tests to examine the existence of inventory at year end. 4: Select financial statement information 12/31/2019 12/31/2018 12/31/2017 Total sales $ 55443900 $ 52,700,440 $ 50,384,300 Cost of goods sold 47,771,880 46,810,900 44,670,400 Ending inventory 9,582,960 8,100,220 7,730,660 5: Ending inventory account as of December 31, 2019 Inventory Description Quantity Ending Balance AC Unit - Model 635 1,240 Units $ 806,000 AC Unit - Model 770 1,733 Units 1,940,960 Furnace- Model 223 1,992 Furnaces 2,589,600 Furnace - Model 225 2,008 Furnaces 2,761,000 1,485,400 Air handling ducts Total 11,883 Boxes $ 9,582,960 6: More Info A single AC unit is stored on a 4 foot by 4 foot pallet. W two additional pallets are placed on shelves above the fi arehouse storage shelves allow the company to store one pallet on the floor while rst pallet. Furnaces are also stored on similar=sized pallets. Due to the height of bl
Discover more documents: Sign up today!
Unlock a world of knowledge! Explore tailored content for a richer learning experience. Here's what you'll get:
  • Access to all documents
  • Unlimited textbook solutions
  • 24/7 expert homework help