A Large Company Uses a Perpetual Inventory System and a Sophisticated

question 79

Essay

A large company uses a perpetual inventory system and a sophisticated computerized system to account for its inventory over time. At the end of the accounting period, the company performs a physical count of the inventory on hand and hires hundreds of workers to carry out this task.
Required:
1. Why does the company perform a physical count of inventory?
2. After the physical count of inventory is completed, describe the required journal entry and provide an example.