Question

At the end of the year, Delisle Company's accounting records showed that they had 80 items in stock at a FIFO cost of $15 each. These normally sell for $35 each. However, the physical inventory count found only 75 items. What is the amount of an adjustment, if any, that must be made to the value of the inventory at year-end? Enter digits only, with no commas, decimal points, or dollar signs. Type 0 if no adjustment is needed.

Answer 1

An adjustment of $75 is needed to account for the discrepancy between the Delisle Company's accounting records and the physical inventory count, based on the missing five items valued at $15 each.

Step-by-step explanation:

Upon reviewing the Delisle Company's end-of-year inventory records, it is noted that there is a discrepancy between the accounting records and the physical inventory count.

The accounting records show 80 items in stock valued at $15 each, whereas the physical inventory count has found only 75 items. To rectify this, an inventory adjustment must be calculated.

The calculation is based on the FIFO (First-In, First-Out) inventory costing method. Since five items valued at $15 each are missing, the adjustment to the inventory value equates to $15 multiplied by 5 (the number of items missing), totaling an adjustment amount of $75.