CASE STUDY #1

SLO 2: Distinguish between perpetual and periodic inventory systems.

Northeast Orthopedic Clinic prescribes a variety of medical supplies for the treatment of various patient conditions, Although patients are free to purchase the medical supplies from any supplier they choose, the clinic provides the option of acquiring most of the items form the clinic. Standard markup procedure is to price the supplies at 300 percent of cost.

Medical supplies are physically inventoried at the end of the each month, and the computer records are adjusted monthly for any discrepancies. After this adjustment, medical supplies are ordered based on a comparison of standard order quantities to supplies on hand.

At the end of the fiscal year, a comparison of the computers perpetual inventory listing of medical supplies on hand to actual supplies per physical inventory revealed the following:

Inventory Number	Description	Average Unit Cost	Quantity on Hand Per Computer	Quantity on Hand per Physical Inventory
104	Wrist compression support	$ 8	10	7
112	Arm sling	$ 9	12	10
114	Carpal tunnel wrist support	$ 10	5	4
116	Thumb brace	$ 12	7	6
121	Clavicle support	$ 14	11	10
123	Lumbosacral support	$ 25	15	12
130	Dorsiwedge night splint	$ 72	4	2

Compute the ending inventory value per the computer

Compute the ending inventory value per the physical inventory

Which of the two values should appear in the financial statements? Why?

List three common reasons there might be a discrepancy between the perpetual inventory per the computer and the physical inventory

Are additional controls over the supplies inventory needed? Why or why not? *

Suggest one supplies inventory control that should be considered*

*Requires additional research- PLEASE PROVIDE EXCEL FORMULAS AS WORK NEEDS TO BE TRANSFERRED TO EXCEL