Since CondoCleaners.com is a service organization, it does not have any inventory that is distributed or sold. However, Jim periodically buys large quantities of cleaning products for his business when they are on sale. As it turns out, just prior to the March year end, he purchased three months’ worth of cleaning supplies at a local bulk store.
Although not a huge amount (about $5,000), this amount is material to his growing business.
REQUIRED
Explain how the audit of supplies inventory is similar to or different from the audit of inventory that is being held for resale.