In a good internal control system, which of the following sets of documents is required for proper approval of a payment to a supplier?
A) a journal entry, a supplier invoice, and a description of the goods being purchased
B) a receiving report, an invoice, and a purchase order
C) a purchase order, a journal entry, and a price catalog
D) a supplier invoice, a bill of lading, and the supplier's financial statements
B
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The Morris Lest, Inc. lost its entire inventory during a hurricane. Fortunately, the company's records were not lost in the same disaster. Key inventory data follow:
Beginning inventory $100,000 Purchases (up to date of quake) $800,000 Net sales (up to date of quake) $1,000,000 Gross profit ratio 30% Use the gross profit method to estimate the cost of the inventory lost in the earthquake.