s T he physical Which of the following could explain the dif

s. T he physical Which of the following could explain the difference count of inventory of a retailer was higher than shown by the the items a. Several bill-and-hold inventory items were not counted but the tags placed on perpetual records. had been taken off the items and added to the records its suppliers. been reflected in the perpetual records by customers had not been reflected in the perpetual b. Credit memos for several items returned c. No journal entr d. Several consignment-in items had not arrived at the date of the inventory count and had not y had been made on the retailer\'s books for several items returned to

Solution

The answer is option (b) Credit memos for several items returned by customers had not been reflected in the perpetual records.

** Some times it may so happen that the customers had returned the goods to the retailer but the credit memos were not recorded in the perpetual record. As a result the book stcok will be lower than the actual physical stock.

In the given case study the same situation arises, hence we can assume that as the credit memos were not recorded in the perpetual recorded properly the book stock is showing a lower balance thet the physical stock.

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