[parvaluemethod]

Has anybody looked at the Inventory count rec in the AUD sample test provided by the AICPA? It asks for adjustments to the “perpetual inventory listing”. The listing contains 1000 units of the 10mm widgets, while the physical count shows only 250. The reason for this is that 750 units are out on consignment with a customer. However, this customer does not sell the units until AFTER year-end. So presumably these 750 units should be included in the inventory balance. But the answers provided imply that these units should NOT be included.

The specific instructions do ask for adjustments to the “perpetual inventory listing”, and so in the first part of the question, one could argue that you would need to make the downward adjustment. However, the heading of column B in the little spreadsheet asks for adjustment to “INVENTORY BALANCE”. And then the concluding question asks for a conclusion on the “ENDING INVENTORY BALANCE”.

[Abiluv0]

Hey Parvaluemethod,

If you look at the email that was sent from the controller, he says that the consigned inventory should have been moved out of the perpetual inventory into the consigned inventory. That is why there is a decrease to the perpetual inventory. The company is still accounting for it, just in another account. Hope that helps!

[Author]

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