QUESTION ONE [40] Joosey Loosey (Pty) Ltd is a manufacturer and distributor of bottled fruit juice. The company has 10 different types of juices and it bottles these juices into three different sized bottles. This juice is squeezed from fresh fruit which is purchased from local organic farmers, the carbonated water is purchased from a local wholesaler, and the bottles are imported from China on a weekly basis. You have been assigned to audit the inventory and production cycle for the year ending 30 September 2018 of Joosey Loosey (Pty) Ltd. The balances in the annual financial statements are as follows: R The company uses the first-in-first-out (FIFO) method to value its inventory. All inventory is kept in the warehouse and at the factory on the company's premises. The company uses the free on board (FOB) system when importing bottles from China. All goods in transit are included in the raw material balance. At year end, there was R212 000 worth in bottles in transit. The company has satisfactory internal controls. All goods received are entered onto the computer system using a goods received note (GRN). All raw materials are then picked in accordance with the juice recipes and are issued via a picking slip which is signed by the procurement clerk and the picking clerk for each juice batch. Each picking slip is numbered and agreed to the recipe. All juice that is in the juicers at year end is measured per litre and then valued accordingly as work in progress before it is bottled. Once juice is taken from the juicer, a juice extraction form (JEF) is completed. The JEF details the quantity and type of juice that was extracted and is signed by the workman in charge, and the factory foreman. The juice is then bottled and labelled and is ready for sale. All finished goods that are issued to be sold are packed into boxes and stored in the refrigerators in the warehouse. 1 You are required to: 1.1. Discuss the audit procedures you would conduct on the day of the inventory count as the auditor who has been requested to attend the year-end inventory count of Joosey Loosey (Pty) Ltd; (20) 1.2. Describe the risks of material misstatement at the assertion level over the inventory balance at year end. (10) 1.3. Discuss the audit procedures that you as the auditor would conduct in respect of the inventory obsolescence allowance balance