Question
1-B At the end of the year, Randys Parts Company had the following items in inventory. Item Quantity Unit Cost Unit Market Value P1 70
1-B
At the end of the year, Randys Parts Company had the following items in inventory.
Item | Quantity | Unit Cost | Unit Market Value |
---|---|---|---|
P1 | 70 | $ 92 | $ 94 |
P2 | 35 | 65 | 75 |
P3 | 83 | 134 | 122 |
P4 | 43 | 65 | 73 |
Required a. Determine the amount of ending inventory using the lower-of-cost-or-market rule applied to each individual inventory item. b. Provide the general journal entry necessary to write down the inventory based on Requirement a. Assume that Randys Parts Company uses the perpetual inventory system. c. Determine the amount of ending inventory, assuming that the lower-of-cost-or-market rule is applied to the total inventory in aggregate. d. Provide the general journal entry necessary to write down the inventory based on Requirement c. Assume that Randys Parts Company uses the perpetual inventory system.
1-B
Toyland wishes to produce quarterly financial statements, but it takes a physical count of inventory only at year-end. The following historical data were taken from the Year 1 and Year 2 accounting records.
Year 1 | Year 2 | |
---|---|---|
Net sales | $ 153,000 | $ 199,000 |
Cost of goods sold | 66,100 | 85,260 |
At the end of the first quarter of Year 3, Toylands ledger had the following account balances.
Sales | $ 231,000 |
---|---|
Purchases | 164,000 |
Beginning inventory 1/1/Year 3 | 64,100 |
Ending inventory 3/31/Year 3 | 96,000 |
Based on purchases and sales, the Toyland accountant thinks inventory is low. Required Using the information provided, estimate the following for the first quarter of Year 3: a. Cost of goods sold. (Use the average cost of goods sold percentage.) (Round your intermediate percentage values to 2 decimal places and final answer to nearest whole dollar amount.) b. Ending inventory at March 31 based on the historical cost of goods sold percentage. c. Inventory shortage
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started