Your client, Ridgewood Heating and Cooling, specializes in residential air conditioning and heating installations. The company maintains an inventory of air conditioning units, furnaces, and air handling ductwork. The client has provided the following selected financial statement information for the year ending December 31, 2020:

Ridgewood stores inventory in a 100 000-square-foot warehouse facility at a location different from its corporate office. A single air conditioning unit is stored on a 4-foot-by-4-foot pallet. Warehouse storage shelves allow the company to store one pallet on the floor while two additional pallets are placed on shelves above the first pallet. Furnaces are also stored on similar sized pallets. Due to the height of the furnaces, only one unit can be stored on a shelf above another pallet that rests on the floor. Air handling ducts are stored in boxes that are 5 feet by 5 feet at the base and 7 feet tall. Three boxes can be stacked on top of the box that sits on the floor.

REQUIRED
a. Design analytical procedures to evaluate the reasonableness of the ending inventory account.
b. What concerns, if any, do you have about the ending inventory at Ridgewood Heating and Cooling?

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12/31/2020 $55 443 900 Air handling ducts Total 12/31/2019 $52 700 440 46 810 900 8 100 220 Total sales Cost of goods sold Ending inventory Following is a breakdown of the ending inventory account as of December 31, 2020: Inventory Description Quantity Ending Balance AC unit-Model 635 1 240 units $ 806 000 AC unit-Model 770 1 733 units 1 940 960 Furnace Model 223 1 992 furnaces 2 589 600 Furnace Model 225 2 008 furnaces 2 761 000 11 883 boxes 1 485 400 $9 582 960 47 771 880 9 582 960 12/31/2018 $50 384 300 44 670 400 7 730 660