Question 12 (15 marks) i. Your analysis of inventory indicates that inventory at the end of 2016 was overstated by $27,000 due to an inventory count error. Inventory at the end of 2017 was correctly stated. ii. Invoices in the amount of $107,000 for inventory received in December 2016 were not entered on the books in 2016. They were recorded as purchases in January 2017 when they were paid. The goods were counted in the 2016 inventory count and included in ending inventory on the 2016 financial statements. iii. Goods received on consignment amounting to $89,000 were included in the physical count of goods at the end of 2017 and included in ending inventory on the 2017 financial statements. Required: Part A For each of the three scenarios, indicate the effects - overstated or understated. (9 marks 2016 2017 2017 End Income Income R/E i. Inventory count error ii. Invoice recorded too late ili. Included consignment goods 8 |Page ACCT 3310 Intermediate Accounting Final Exam Summer 2018 Question 12 (15 marks) - cont'd Part B A particular production process requires two types of raw materials to produce the end product. Each unit of finished product requires three units of raw material A and 2 units of raw material B and processing costs of $35. The following provides information on inventories at year-end: Replacement Net realizable Inventory item # units Cost per unit cost value Finished product BOO $181 NA $161 Raw material A 150 10 $17 NA Raw material B 110 58 53 NA Required: Evaluate these inventories to determine the amount of write-down, if any. (6 marks)