Strawman Company reserves for inventory on hand that it estimates to be obsolete or slow moving. For the year ending 12/31/2023, the expense account associated with this reserve has a balance of $80,000. Industry averages suggest that 3 percent of the year-end inventory balance is obsolete on average, with higher percentages deemed obsolete for inventory still in the warehouse from Q1 purchases (6% obsolete) than from inventory purchased and still in the warehouse from Q2 (3% obsolete), Q3 (296 obsolete), or Q4 (196 obsolete). Strawman has provided the following information on inventory in the warehouse at 12/31/2023, broken down by the month in which that inventory was originally purchased: MOTH OF PURCHASE SINENTORY ON HAND AT 12/31 JAN FEB MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER 79,700 83,400 39,000 98,500 84,800 77,300 112,500 118,700 110,500 350,400 640,900 946,300 TOTAL With the reserve account develop a sufficiently precise expectation and calculate the acceptance differences. Strawman's pre-tax income is $357,570. The audit plan calls for high assurance from this substantive analytic and inventory is a high-risk account. Round all figures to the nearest dollar. 2,742,000

Strawman Company reserves for inventory on hand that it estimates to be obsolete or slow moving. For the year ending 12/31/2023, the expense account associated with this reserve has a balance of $80,000. Industry averages suggest that 3 percent of the year-end inventory balance is obsolete on average, with higher percentages deemed obsolete for inventory still in the warehouse from Q1 purchases (6% obsolete) than from inventory purchased and still in the warehouse from Q2 (3% obsolete), Q3 (296 obsolete), or Q4 (196 obsolete). Strawman has provided the following information on inventory in the warehouse at 12/31/2023, broken down by the month in which that inventory was originally purchased: MOTH OF PURCHASE SINENTORY ON HAND AT 12/31 JAN FEB MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER 79,700 83,400 39,000 98,500 84,800 77,300 112,500 118,700 110,500 350,400 640,900 946,300 TOTAL With the reserve account develop a sufficiently precise expectation and calculate the acceptance differences. Strawman's pre-tax income is $357,570. The audit plan calls for high assurance from this substantive analytic and inventory is a high-risk account. Round all figures to the nearest dollar. 2,742,000

Name: 2 Strawman Company reserves for inventory on hand that it estimates to
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Description: 2 Strawman Company reserves for inventory on hand that it estimates to be obsolete or slow moving. For the year ending12/31/2023, the expense account associated with this reserve has a balance of $80,000. Industry averages suggest that 3 percentof th

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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