Document #1: INTEROFFICE MEMO To: Accounting Manager From: Controller Re: Year 1 Ending Inventory The results of the annual physical inventory as of December 31, Year 1, were 12,000 units at $9.30 per unit. Document #2: Date March 31 June 30 Sept. 30 Dec. 31 Page 15 Widget Wonders, Inc. - Purchase Journal Units Purchases Freight In Purchase Accounts Discounts Payable 16,000 149,600 5,120 -5,600 149, 120 19,000 172.900 6,080 -6,650 172,330 17,000 146,200 5,440 -5,950 145,690 11,000 96,800 3,520 -3,850 96,470 Total 63,000 565,500 20,160 (22,050) 563,610 Document #3: Widget Wonder, Inc. Footnote Disclosures - Inventory Footnote We sell one product, which we purchase from various suppliers. Our inventory is stated at the lower of cost or market. Cost is principally determined using the last-in, first-out (LIFO) method, applied to total inventory (perpetual method). At December 31, the replacement cost of our inventory was $9.20 per unit and the net realizable value was $10.00 per unit. Our normal profit margin is $1.20 per unit Document #4: Page 10 Date Widget Wonders, Inc. - Sales Journal Units Accounts Sales Freight Out Receivable Discount Sales Grand Total 43,000 643,000 11,000 14,000 668,000 Cost of Goods Sold and Inventory Part 1: At year-end, Wonder Widgets must complete the lower of cost or market analysis for inventory. Review the documents under the Exhibits tab and compute the appropriate amounts in the schedule below. Enter the appropriate amount in each indicated cell; round all amounts to the nearest whole dollar. If the amount is $0, you must enter "0" in the cell to receive credit. Widget Wonders, Inc. Lower of Cost or Market Analysis Year 2 Cost (@LIFO) Replacement Cost Net Realizable Value (NRV) NRV less Profit Margin Part 2: Review the documents under the Exhibits tab and complete the adjusting journal entry to value ending inventory at the lower of cost or market. For each account below, select the most appropriate account title in the "Account" column. List debited accounts first and credited accounts second. For the journal entry amounts, click in each "Debit" and "Credit" cell and enter the appropriate amount; round all amounts to the nearest whole dollar. If the amount is $0, you must enter "o" in the cell to receive credit. Account Debit Credit