On December 31, 2010, what is the estimated cost of missing inventory?
The following information appears in Olivia Company’s records for the year ended December 31, 2010:
Inventory, January 1 650,000
Purchases 2,300,000
Purchase returns 80,000
Freight in 60,000
Sales 3,400,000
Sales discounts 20,000
Sales returns 30,000
On December 31, 2010, a physical inventory revealed that the ending inventory was only P420,000. The gross profit on sales has remained constant at 30 percent in recent years. Olivia suspects that some inventory may have been pilfered by one of the entity’s employees.
On December 31, 2010, what is the estimated cost of missing inventory?
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