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Mitchell's Specialties sells high-end furniture (dressers, chairs, sofas, and tables). The company has been in business for several years. Based on its experience, management projects
Mitchell's Specialties sells high-end furniture (dressers, chairs, sofas, and tables). The company has been in business for several years. Based on its experience, management projects next year's sales prices of year-end inventory using the trend in monthly sales prices during the current year. Presented below are those trends in sales prices for each of its four types of inventory, as well as next year's projected sales price. Also presented are the number of units of ending inventory and the average cost of each of those units. Average Monthly Sales Prices and Projections $3,000 $2,676 $2,500 $2,000 1 $1,500 $1.177 $1,000 46870 $500 5658 1 $0 April March May August September June July November December January February October Projection Dressers Chairs Sofas ---Tables Units of Ending Inventory 75 Average Unit Cost of Ending Inventory 80 $1,670 $1,540 70 65 60 50 40 40 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 $810 30 20 20 $320 10 0 Dressers Chairs Sofas Tables Dressers Chairs Sofas Tables Required: 1. Which type of inventory has seen the greatest growth in sales prices over the current year? 2. Which type of inventory has seen the greatest decline in sales prices over the current year? 3. Based on the trend lines provided, for which inventory items does management project to sell below its average unit cost in the following year (Hint: Compare projected sales prices to the bar chart showing average unit cost)? 4. Prepare the year-end adjusting entry to record inventory using the lower of cost or net realizable value method (Hint: Be sure to account for the number of units of ending inventory in your calculation). Prepare the year-end adjusting entry to record inventory using the lower of cost or net realizable value method (Hint: Be sure to account for the number of units of ending inventory in your calculation). (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 1 > Record the inventory using the lower of cost or net realizable value. Note: Enter debits before credits. General Journal Debit Credit Event 1 Record entry Clear entry View general Journal
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