Question

Your answer is incorrect. Kingbird Bank and Trust is considerlng glving Pohl Company a loan. Before doing so, It decldes that further discussions with Pohl's accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $280,500. Discussions with the accountant reveal the following. 1. Pohl shipped goods costing $56,100 to Hemlock Company FOB shipping point on December 28 . The goods are not expected to reach Hemlock untll January 12. The goods were not included in the physical inventory because they were not in the warehouse. 2. The physical count of the inventory did not include goods costing $95,000 that were shipped to Pohl FOB destination on warehouse. December 27 and were still in transit at year-end. 3. Pohl received goods costing $25,500 on January 2 . The goods were shipped FOB shipping point on December 26 by Yanice Co. The goods were not included in the physical count. 4. Pohl shipped goods costing $52,020 to Ehler of Canada FOB destination on December 30 . The goods were received in Canada on January 8 . They were not included in Pohl's physical inventory. 5. Pohl received goods costing $42,840 on January 2 that were shipped FOB destination on December 29 . The shipment was rush order that was supposed to arrive December 31 . This purchase was included in the ending inventory of $280,500.

Answer 1

Final answer:

Inventory errors can affect a company's financial statement, including the balance sheet. It is important to discuss these discrepancies with the accountant before deciding on a loan.

Step-by-step explanation:

Inventory errors can affect a company's financial statement, including the balance sheet. In this case, there are several inventory items that were not properly included in the physical count. For example, goods shipped out but not yet delivered, goods in transit, and rush orders that arrived after year-end.

These errors can lead to an inaccurate valuation of the inventory and potentially misrepresent the financial health of the company. Therefore, it is important for Kingbird Bank and Trust to discuss these inventory discrepancies with Pohl's accountant before deciding on the loan.