Ho Designs experienced the following events during 2018, its first year of opera

Question

Ho Designs experienced the following events during 2018, its first year of operation: 1. Started the business when it acquired $89,000 cash from the issue of common stock. 2. Paid $38,000 cash to purchase inventory. 3. Sold inventory costing $22,500 for $44,000 cash. 4. Physically counted inventory showing $15,300 inventory was on hand at the end of the accounting period. Required a. Determine the amount of the difference between book balance and the actual amount of inventory as determined by the physical count. Difference in book and actual inventory

Explanation / Answer

Book value of inventory = 38000-22500 = 15500

Actual inventory = 15300

Difference in book and actual inventory = 15500-15300 = $200

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