FASHION BLUE LIMITED Fashion blue Limited hired you as Accounts Receivable and Accounts Payable Manager, the company carries out business of readymade garments through large shops in the major cities of UK Its inventory leder account balances at December 31, 2017 under the perpetual inventory system was 7,341,000 only. Its owner Mr. Kaizer expected a small inventory shortfall due to damage and petty theft but consider this shortfall to be excessive. After joining Fashion Blue Limited you discovered the following issues in the inventory management of Fashion Blue Limited: 1) Goods costing 3,000 were invoiced to Ebrahim Limited for 4,250 on December 29, 2017 on FOB basis. The goods were actually despatched to the customer on January 2, 2018.. 2) Included in the physical count were goods worth 2,000 which were held on behalf of a third party. 3) Goods costing 4,100 purchased on credit from Morris & Co. were received on December 28, 2017 and included in the physical count. However, the purchase had not been recoorded. 4) On December 23, 2017 goods costing 4,000 were purchased on credit from Mubina Supplies. The purchase was recorded on December 27, 2017 i.e. when the goods were lifted by the transport company appointed by Fashion Blue Limited from the warehouse of Mubina Supplies. The goods arrived on Januart 3, 2018. 5) List of inventory at a shop situated in London had been undercasted by 900. 6) On December 25, 2017 goods costing 31,000 were sold on credit to Skims Industries for 50,000. The goods were shipped on December 28, 2017 and were received by the customer on January 2, 2018. 7) Goods costing 25,000 had been returned to Aberto Garments on December 30, 2017. A credit note were received from the supplier on January 5, 2018 and entered in the books in January 2018. No payment had been made for the goods prior to their return. 8) Goods sold to a customer Mr. Hales were recorded in inventory ledger account at the sale price of 7,800. The goods were sold a cost plus 30% Required: a) Determine the value of inventory that should be recorded in the balance sheet as on December 31, 2017 b) Reconcile the ledger balance with the physical record to determine the shortage (if any) c) Prepare the adjusting entries that should be recorded in the books of Fashion Blue Limited, in December 2017. Physical count mentioned in point 2

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