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.

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Definitions:

Driving Time

The duration taken to travel from one location to another by vehicle, influenced by factors such as distance, speed, and traffic conditions.

Gross Pay

The total amount of money earned by an employee before any deductions are taken out.

Gross Salary

The total amount of wages or salary earned by an employee before any deductions or taxes are applied.

Remodeling Project

A project that involves making improvements or alterations to a building or space to enhance its appearance or functionality.