You are assigned to the December 31, 2001, audit of Sea Gull Airframes, Inc. The company designs

Question:

You are assigned to the December 31, 2001, audit of Sea Gull Airframes, Inc. The company designs and manufactures aircraft superstructures and airframe components.

You observed the physical inventory at December 31 and are satisfied it was properly taken. The inventory at December 31, 2001, has been priced, extended, and totaled by the client and is made up of about 5,000 inventory items with a total valuation of $$8,275,000.$ In performing inventory price tests, you have decided to stratify your tests, and you conclude that you should have two strata: items with a total value over $$5,000$ and those with a value of less than $$5,000.$ The book values are as follows:

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In performing your pricing and extension tests, you have decided to test about 50 inventory items in detail. You have selected 40 of the over $$5,000$ items and 10 of those under $$5,000$ at random from the population. You find all items to be correct except for the following items A through G, which you believe may be misstated. You have tested the following items, to this point, exclusive of A through G.

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Sea Gull Airframes uses a periodic inventory system and values its inventory at the lower of FIFO cost or market. You were able to locate all invoices needed for your examination. The seven inventory items in the sample which you believe may be misstated are shown below. image text in transcribed