Included in the count was $30,000 of goods that were parts for a machine that the company no longer made. Given the high-tech nature of Sergei’s products, it was unlikely that these obsolete parts had any other use. However, management would prefer to keep them on the books at cost, “since that is what we paid for them, after all.”

INSTRUCTIONS Prepare a schedule to determine the correct inventory amount. Provide explanations for each item above, saying why you did or did not make an adjustment for each item.