Problem:
You are auditing Martha's Prison Clothes, Inc., as of December 31, 2012. The inventory for orange jumpsuits shows 1,263 suits at $782 for a total of $987,666. When you look at the invoices for the jumpsuits, you see the following:
Inventory #----------- Date------------ Quantity------------ Unit Price------------ Total
12732------------ 11/22/10------------- 1,000----------------- $765------------ $765,000
12844------------ 12/03/10--------------- 800------------------- 777-------------- 621,600
12905------------ 12/28/10--------------- 600------------------- 782-------------- 469,200
Required:
a. Determine the adjusting entry, if any, for the cost of inventory at December 31, 2012.
b. Would your answer to part (a) be different if you saw an invoice dated January 9, 2013, for 500 suits at $750?