Cost Allocation and Lower-of-Cost-or-Market

Douglas Company's beginning inventory and purchases during the fiscal year ended December 31, 20--, were as shown.

		Units	Unit Price		Total Cost
January 1, 20--	Beginning inventory	1,100	$	8.00	$	8,800
March 5	1st purchase	910		9.00		8,190
April 16	2nd purchase	410		9.50		3,895
June 3	3rd purchase	700		10.20		7,140
August 18	4th purchase	620		10.90		6,758
September 13	5th purchase	790		11.90		9,401
November 14	6th purchase	390		13.80		5,382
December 3	7th purchase	500		13.85		6,925
		5,420			$	56,491

There are 1,000 units of inventory on hand on December 31.

Required:

1. Calculate the total amount to be assigned to the ending inventory and cost of goods sold on December 31 under each of the following methods:

Cost of Goods Sold	Cost of Ending Inventory
a. FIFO	$_________	$__________
b. LIFO	$_________	$________
c. Weighted-average (round calculations to two decimal places)	$___________	$__________

2. Assume that the market price per unit (cost to replace) of Douglas's inventory on December 31 was $13. Calculate the total amount to be assigned to the ending inventory on December 31 under each of the following methods:

a. FIFO lower-of-cost-or-market	$_________
b. Weighted-average lower-of-cost-or-market	$_________

3. Prepare required entries to apply:

a. FIFO lower-of-cost-or-market
b. Weighted-average lower-of-cost-or-market

If no entry is required, select "No Entry Required".

Description

Debit

Credit

a.	Loss on write down of inventory
	Merchandise Inventory