Cost flow model. Franklin, LLP, an auditing firm, is reconstructing the records of a client called MultiChips, which is concerned that some of its inventory is missing. The accounting records provide the following information about MultiChips' inventories:
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Product
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Computer Chips
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Potato Chips
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Poker Chips
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Beginning inventory
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$ 600,000
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$160,000
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$ 60,000
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Transfers into inventory accounts
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1,600,000
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600,000
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200,000
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Transfers out of inventory accounts from sales
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1,800,000
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500,000
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180,000
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Ending inventory
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?
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?
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?
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You physically counted the ending inventory and found it to be as follows: computer chips, $600,000; potato chips, $240,000; and poker chips, $50,000. Compute the ending inventory according to the accounting records and compare it to the physical count. What discrepancy do you find between the physical count and the accounting records, if any?