Lipke Sales prepared the following schedule comparing the total cost and NRV of its December 31, 2020. LCNRV applied to: Adjusting entry of LCNRV applied to each product: Total Cost Total NRV Each Product Group Product A $ 29,000 $ 28,000 Product B 46,000 36,000 Product 17,000 17,000 Adjusting entry if LCNRV applied to group: Product D 31,000 30,000 Product E 3,000 7,000 Totals $ 126,000 $ 118,000 10 4 5 16 a. Calculate the merchandise inventory value that should appear on Lipke Sales' December 31, 2020 balance sheet. 17 Apply LCNRV to each product and to inventory as a group by completing the schedule provided. 18 b. Based on your calculations in part (a), prepare the appropriate adjusting entry at year-end 19 20 Chapter 6 Part II In Class - Inventory Error D E The Weston Company performed a physical inventory count at the end of 2019. It was later determined that certain units were counted twice. Explain how this error affects the following: Answer: a. 2019 cost of goods sold b.2019 gross profit C. 2019 net income d. 2020 net income 1 e. The combined two-year income 2 f. Income in years after 2020. 3 Chapter 6 Part II In-Class: Estimating ending inventory-gross profit method Sales Cost of goods sold 1-30% On January 1, The Parts Store had a $450,000 inventory at cost. During the first quarter of the year, it purchased $1,590,000 of merchandise, returned $23,100, and paid freight charges on purchased merchandise totaling $37,600. During the past several years, the store's gross profit on sales has averaged 30%. Under the assumption the store had $2,000,000 of sales during the first quarter of the year, use the gross profit method to estimate its inventory at the end of the first quarter. Goods available for sale Jan. 1 inventory Plus: purchases Less: purchase return Plus: freight in Total Less: Cost of good sold = Ending inventory 15 5 6 Chapter 6 Part II In-Class: Estimating ending inventory-Retail Method At Cost At Retail During 2014, Harmony Co. sold $520,000 of merchandise at marked retail prices. At the end of 2014, the following information was available from its records: At Cost At Retail Beginning inventory 127,600 256,800 Net purchases 231,240 393,600 Goods available for sale: Beginning inventory Net purchases Goods available for sale Less: net sales at retail = Ending inventory % 96 Use Same % 0 Use the retail method to estimate Harmony's 2014 1 ending inventory at cost. Round all calculations to 12 two decimal places. 13