Inventory Estimation (MODIFIED) During 2020, Reliable Hardware Store had the following selected accounts and balances: Net Sales Php 6,000,000 Net Purchases 4,100,000 Beginning Inventory 200,000 The physical count of inventory on hand at December 31, 2020 amounted to Php 240,000. Reliable had consistently followed its policy of having a 50% mark-up on cost. REQUIRED: 1. Compute the inventory shrinkage. 2. The owner of the business believes that the inventory shrinkage was due to shoplifting and intends to hire a security guard with a monthly salary of Php 10,000 to once and for all stop this practice. Is this a wise decision? Explain. Is there an alternative solution and when should this plan of action be adopted?
Inventory Estimation (MODIFIED) During 2020, Reliable Hardware Store had the following selected accounts and balances: Net Sales Php 6,000,000 Net Purchases 4,100,000 Beginning Inventory 200,000 The physical count of inventory on hand at December 31, 2020 amounted to Php 240,000. Reliable had consistently followed its policy of having a 50% mark-up on cost. REQUIRED: 1. Compute the inventory shrinkage. 2. The owner of the business believes that the inventory shrinkage was due to shoplifting and intends to hire a security guard with a monthly salary of Php 10,000 to once and for all stop this practice. Is this a wise decision? Explain. Is there an alternative solution and when should this plan of action be adopted?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Inventory Estimation
(MODIFIED) During 2020, Reliable Hardware Store had the following selected accounts and balances:
| Net Sales |
Php 6,000,000 |
| Net Purchases |
4,100,000 |
| Beginning Inventory | 200,000 |
The physical count of inventory on hand at December 31, 2020 amounted to Php 240,000.
Reliable had consistently followed its policy of having a 50% mark-up on cost.
REQUIRED:
1. Compute the inventory shrinkage.
2. The owner of the business believes that the inventory shrinkage was due to
shoplifting and intends to hire a security guard with a monthly salary of Php 10,000
to once and for all stop this practice. Is this a wise decision? Explain. Is there an
alternative solution and when should this plan of action be adopted?
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