Periodic and perpetual inventory control calculations You are the senior accountant for a shoe wholesaler that uses the periodic inventory method. You have determined the following information from your company’s records, which you assume is correct:

a Inventory of $246 720 was on hand at the start of the year.

b Purchases for the year totalled $1 690 000. Of this, $1 412 000 was purchased on account; that is, accounts payable was credited for this amount at the time of the purchase.

c The ending balance in accounts payable was $47 500 higher than the opening balance.

d A year-end inventory count revealed inventory of $324 800.

Required:

1 Calculate COGS according to the periodic inventory method.

2 Assume now that your company uses the perpetual method of inventory control, and that your records show that $1 548 325 of inventory (at cost) was sold during the year. What is the adjustment needed to correct the records, given the inventory count in item

(d) above? What might the need for this adjustment indicate about company operations?