Questions 1-8

Case 5.2: West River Orthopedic Clinic Key concept: Physical inventory and prot effects JWest River 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 from the clinic. Standard markup procedure is to price the supplies at 300 percent of cost. Medical supplies are physically inventoried at the end of 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 computer's perpetual inventory listing of medical supplies on hand to actual supplies per physical inventory revealed the following: Quantity on Quantity on Hand Inventory Average Hand per per Physical Number Description Unit Cost Computer Inventory 104 Wrist compression support 58 1o 7 112 Arm sling $9 12 10 111. Carpal tunnel wrist support $10 5 4 116 Thumb brace $12 7 6 121 Clavlcle support $14 11 10 123 Lumbosatral support 525 15 12 130 Dorslwedge night splint $72 4 2 Assignments and Questions 1. Compute the ending inventory value per the computer. 2. Compute the ending inventory value per the physical inventory. 3. Which of the two values should appear in the nancial statements? Why/2 Assignments and Questions 1. Compute the ending inventory value per the computer. 2. Compute the ending inventory value per the physical inventory. 3. Which of the two values should appear in the nancial statements? Why? 4. What adjusting entry is needed? 5. What is the likely effect on revenues and profit? 6. List three common reasons there might be a discrepancy between the perpetual inventory per the computer and the physical inventory. 7. Are additional controls over the supplies inventory needed? Why or why not? 8. Suggest one supplies inventory control that should be considered