E6-2 Farley Bains, an auditor with Nolls CPAS, is performing a review of Ryder Company'sInventory account. Ryder did not have a good year, and top management is under pressureto boost reported income. According to its records, the inventory balance at year-end was$740,000. However, the following information was not considered when determining thatamount.1. Included in the company's count were goods with a cost of $228,000 that theis holding on consignment. The goods belong to Nader Corporation.2. The physical count did not include goods purchased by Ryder with a cost of $40,000that were shipped FOB shipping point on December 28 and did not arrive at Ryder'swarehouse until January 3.3. Included in the Inventory account was $17,000 of office supplies that were stored inthe warehouse and were to be used by the company's supervisors and managers dur-ing the coming year.4. The company received an order on December 29 that was boxed and was sitting onthe loading dock awaiting pick-up on December 31. The shipper picked up the goodson January 1 and delivered them on January 6. The shipping terms were FOB ship-ping point. The goods had a selling price of $40,000 and a cost of $29,000. The goodswere not included in the count because they were sitting on the dock.5. Included in the count was $50,000 of goods that were parts for a machine that thecompany no longer made. Given the high-tech nature of Ryder's products, it wasunlikely that these obsolete parts had any other use. However, management wouldprefer to keep them on the books at cost, "since that is what we paid for them, after all."companyInstructionsPranara a schedule to determine the correct inventory amount. Provide explanations foreach item above, stating why you did or did not make an adjustment for each item

Name: E6-2 Farley Bains, an auditor with Nolls CPAS, is performing a review
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Description: E6-2 Farley Bains, an auditor with Nolls CPAS, is performing a review of Ryder Company'sInventory account. Ryder did not have a good year, and top management is under pressureto boost reported income. According to its records, the inventory balance

Step 1 Inventory cost must be determined to find the correct value of product

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E6-2 Farley Bains, an auditor with Nolls CPAs, is performing a review of Ryder Company's nventory account. Ryder did not have a good year, and top management is under pressure o boost reported income. According to its records, the inventory balance at year-end was $740,000. However, the following information was not considered when determining that amount. 1. Included in the company's count were goods with a cost of $228,000 that the company is holding on consignment. The goods belong to Nader Corporation. 2. The physical count did not include goods purchased by Ryder with a cost of $40,000 that were shipped FOB shipping point on December 28 and did not arrive at Ryder's warehouse until January 3. 3. Included in the Inventory account was $17,000 of office supplies that were stored in the warehouse and were to be used by the company's supervisors and ing the coming year. 4. The company receivcd an order on December 29 that was boxed and was sitting on managers dur- the loading doal ouưniting nialı

E6-2 Farley Bains, an auditor with Nolls CPAs, is performing a review of Ryder Company's nventory account. Ryder did not have a good year, and top management is under pressure o boost reported income. According to its records, the inventory balance at year-end was $740,000. However, the following information was not considered when determining that amount. 1. Included in the company's count were goods with a cost of $228,000 that the company is holding on consignment. The goods belong to Nader Corporation. 2. The physical count did not include goods purchased by Ryder with a cost of $40,000 that were shipped FOB shipping point on December 28 and did not arrive at Ryder's warehouse until January 3. 3. Included in the Inventory account was $17,000 of office supplies that were stored in the warehouse and were to be used by the company's supervisors and ing the coming year. 4. The company receivcd an order on December 29 that was boxed and was sitting on managers dur- the loading doal ouưniting nialı

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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