A client's inventory is recorded at $600,000 and is comprised of 1,000 items.The auditors examined a sample of items with a recorded balance of $100,000 and determined an audited value of $90,000.What is the estimated audited value for inventory?
A)$90,000
B)$540,000
C)$590,000
D)$666,666

Question

Quizplus · Accepted Answer

The auditors found a discrepancy of $10,000 ($100,000 - $90,000) in the sample of items, so it's reasonable to assume that the entire inventory may have a similar percentage of discrepancy. Therefore, the estimated audited value for inventory would be $540,000 ($600,000 - ($10,000/$100,000) * $600,000).

A Client's Inventory Is Recorded at $600,000 and Is Comprised