Ma Hardware is the only hardware store in a remote area of Hong Kong. Some of Ma’s transactions during the current year are as follows: |
Nov. | 5 | Sold lumber on account to Bemidji Construction, $13,390. The inventory subsidiary ledger shows the cost of this goods was $9,105. |
Nov. | 9 | Purchased tools on account from Owatonna Tool Company, $3,800. |
Dec. | 5 | Collected in cash the $13,390 account receivable from Bemidji Construction. |
Dec. | 9 | Paid the $3,800 owed to Owatonna Tool Company. |
Dec. | 31 |
Ma’s personnel counted the inventory on hand and determined its cost to be $182,080. The accounting records, however, indicate inventory of $183,790 and a cost of goods sold of $695,222. The physical count of the inventory was observed by the company’s auditors and is considered correct. |