How often do need to count inventory

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It is the end of November and Liam has been in touch with his grandmother. His grandmother asked Liam how well things went in his first month of business. Liam, too, would like to know if the company has been profitable or not during November. Liam realizes that in order to determine Shoe Doggs' income, he must first make adjustments.

Liam puts together the following additional information.

1. A count reveals that 30% of supplies were used during November.
2. Liam estimates that all of his equipment will have a useful life of 4 years. (Assume Liam decides to record a full month's worth of depreciation, regardless of when the equipment was obtained by the business.)
3. Liam's grandmother has decided to charge interest of 5% on the note payable extended on November 16. The loan plus interest is to be repaid in 24 months. (Assume that half a month of interest accrued during November.)
4. On November 30, a friend of Liam's asks him host a valuation booth at a sneaker shop. Liam agrees and runs a booth on the 30th for 3 hours. The next day, Liam prepares an invoice for $500 and emails it to his friend. The friend says he will pass the invoice along to the shop and it will be paid sometime in December.

Problem 1: How often do need to count inventory if maintain it using the perpetual system? Do need to count inventory at all?

 

Reference no: EM133009601

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