Question: AccountABC LLC manufactures and sells paper envelopes. Thestock of envelopes was included in the closing inventoryas of December 31, 2005, at a cost of $50 each per pack.During the final audit, the auditors noted that thesubsequent sale price for the inventory at January 15,2006, was $40 each per pack. Furthermore, inquiry revealsthat during the physical stock take, a water leakage hascreated damages to the paper and the glue. Accordingly, inthe following week, ABC LLC spent a total of $15 per packfor repairing and reapplying glue to the envelopes.The net realizable value and inventory write-down (loss)amount to:(a) $40 and $10 respectively.(b) $45 and $10 respectively.(c) $25 and $25 respectively.(d) $35 and $25 respectively.(e) $30 and $15 respectively.23

Given Information:Cost per pack (as of December 31, 2005): $50 per packSubsequent sale price (as of…

Answered: Question: Account ABC LLC manufactures…

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter14: Activities Required In Completing A Quality Audit

Section: Chapter Questions

Problem 90RSCQ

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ABC LLC manufactures and sells paper envelopes. The stock of envelopes was included in the closing inventory as of December 31, 2005, at a cost of $50 each per pack. During the final audit, the auditors noted that the subsequent sale price for the inventory at January 15, 2006, was $40 each per pack. Furthermore, inquiry reveals that during the physical stock take, a water leakage has created damages to the paper and the glue. Accordingly, in the following week, ABC LLC spent a total of $15 per pack for repairing and reapplying glue to the envelopes. The net realizable value and inventory write-down (loss) amount to: (a) $40 and $10 respectively. (b) $45 and $10 respectively. (c) $25 and $25 respectively. (d) $35 and $25 respectively. (e) $30 and $15 respectively.23
15. ABC Plc manufactures and sells paper envelopes. The stock of envelopes was included in the closing inventory as of December 31, 2021, at a cost of GHS50 each per pack. During the final audit, the auditors noted that the subsequent sale price for the inventory at January 15, 2022, was GHS40 each per pack. Furthermore, inquiry reveals that during the physical stock take, a water leakage has created damages to the paper and the glue. Accordingly, in the following week, ABC Plc spent a total of GHS15 per pack for repairing and reapplying glue to the envelopes. The net realizable value and inventory write-down (loss) amount to (a) GHS40 and GHS10 respectively. (b) GHS45 and GHS10 respectively. (c) GHS25 and GHS25 respectively. (d) GHS35 and GHS25 respectively. (e) GHS30 and GHS15 respectively. 16 XYZ Plc. changes its method of valuation of inventories from weighted-average method to first-in, first-out (FIFO) method. XYZ Plc. should account for this change as (a) A change in estimate…
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