[jade11]

An audit of the accounting records of Loch Ness Ltd. For the year ending 30 June 2012 discovered that the ending inventory balance was over-valued by $35,000. Upon further investigation, it was discovered that the ending inventory for the previous year was correctly counted and valued, but that the inventory balance as at 30 June 2010 was under-valued by $90,000.
The auditor, concerned at these errors, decides to carry out a thorough investigation (audit) as to the inventory values shown in the company’s financial statements during its six-year history. The following additional errors were detected:

(I) as at 30 June 2009, inventory was over-valued by $15,000

(ii) as at 30 June 2008, inventory was under-valued by $55,000