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In Year 1 , Moss Company signed a contract with a supplier to purchase 78,000 subassemblies at $30 each during Year 2 . When the
In Year 1 , Moss Company signed a contract with a supplier to purchase 78,000 subassemblies at $30 each during Year 2 . When the contract was signed, the contract price was less than the net realizable value of the inventory. The company uses the FIFO method to account for inventory. Assume Moss Company uses a periodic inventory system. Accounting for Inventory Transactions with Purchase Commitments a. The cost of subassemblies has declined, and the estimated net realizable value is now $2,210,000 on December 31 of Year 1. Prepare any year-end entry required for this cost decline. b. The subassemblies are received in Year 2 when the net realizable value is estimated at $2,210,000. The contract was paid in full in cash. Prepare the required purchase entry in Year 2
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