Drop downs:
Drop Downs:
a. What accounting action should Canton take in this situation? b. Give any journal entry required. c. At what amount should the company report Inventory on the balance sheet? d. At what amount should the company report Cost of Goods Sold on the income statement? e. Discuss the accounting principle or concept that is most relevant to this situation. Canton Trade Mart has recently had lackluster sales. The rate of inventory turnover has dropped, and the merchandise is gathering dust. At the same time, competition has forced Canton's suppliers to lower the prices that Canton will pay when it replaces its inventory. It is now December 31, 2018, and the net realizable value of Canton's ending inventory is $60,000 below what the company actually paid for the goods, which was $200,000. Before any adjustments at the end of the period, the cost of Goods Sold account has balance of $750,000 Read the requirements. Requirement a. What accounting action should Canton take in this situation? to account for inventories. The net realizable value of ending inventory is Canton's actual cost, so Canton must write the inventory Canton should apply the net realizable value. V to Requirement b. Give any journal entry required. (Record debits first, then credits. Exclude explanations from any journal entries. If no entry is required, select "No entry required" in the first cell in the "Accounts" column and leave all other cells blank.) Journal Entry Date Accounts Debit Credit to acco Canton should apply the net realizable value. Requirement b. Give any "Accounts" column and le average-cost method first in, first out method last in, first out method lower-of-cost-or-market rule Date The net realizable value of ending inventory is Canton Exclude explanations from any journal entries. equal to less than more than he inventory to st ce down up Dec 31 Requirement c. At what amount should the company report Inventory on the balance sheet? Canton should report Inventory on the balance sheet at $ Requirement d. At what amount should the company report Cost of Goods Sold on the income statement? Requirement d. At what amount should the company report Cost of Goods Sold on the income statement? Canton should report Cost of Goods Sold on the income statement at $ Requirement e. Discuss the accounting principle or concept that is most relevant to this situation. v is the reason to account for inventory using 7 directs accountants to report inventory at the most realistic and transparent amount. alance the cor Consistency Principle Disclosure Principle Materiality Concept Representational Faithfulness Id on th 1 princip is the reason te tronenarent amount f Goods S at average cost. first in, first out. last in, first out. the lower of cost or market. most rele ory using t? Conservatism Consistency Disclosure Materiality Representational Faithfulness directs accountan
