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Leo Corporation uses the perpetual inventory system and began business on April 1. During the month Leo made inventory purchases of $84,700 on terms of 2/10, n/30. Leo returned $3,500 worth of goods during the year. Leo made payment in time to take advantage of the offered cash discounts. Leo sold inventory on account with a value of $71,350 with a markup of 30% on the cost. These were the only inventory transactions during the month. What are the possible reasons that the physical count of inventory would be lower than the perpetual record?

Leo Corporation uses the perpetual inventory system and began business on April 1. During the month Leo made inventory purchases of $84,700 on terms of 2/10, n/30. Leo returned $3,500 worth of goods during the year. Leo made payment in time to take advantage of the offered cash discounts. Leo sold inventory on account with a value of $71,350 with a markup of 30% on the cost. These were the only inventory transactions during the month. What are the possible reasons that the physical count of inventory would be lower than the perpetual record?

FINANCIAL ACCOUNTING
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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Leo Corporation uses the perpetual inventory system and began business on April 1. During the month Leo made inventory purchases of $84,700 on terms of 2/10, n/30. Leo returned $3,500 worth of goods during the year. Leo made payment in time to take advantage of the offered cash discounts. Leo sold inventory on account with a value of $71,350 with a markup of 30% on the cost. These were the only inventory transactions during the month. What are the possible reasons that the physical count of inventory would be lower than the perpetual record? B IVT, T I. IE ☐ 99 à T Word(s)
Transcribed Image Text:Leo Corporation uses the perpetual inventory system and began business on April 1. During the month Leo made inventory purchases of $84,700 on terms of 2/10, n/30. Leo returned $3,500 worth of goods during the year. Leo made payment in time to take advantage of the offered cash discounts. Leo sold inventory on account with a value of $71,350 with a markup of 30% on the cost. These were the only inventory transactions during the month. What are the possible reasons that the physical count of inventory would be lower than the perpetual record? B IVT, T I. IE ☐ 99 à T Word(s)
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