Problem 8.4A (Static) Year-End Adjustments; Shrinkage Losses and LCM (LO8-1,LO8-2,L08-3) Mary's Nursery uses a perpetual Inventory system. At December 31, the perpetual inventory records indicate the following quantities of a particular blue spruce tree First purchase oldest) Second purchase Third purchase Total Quantity 130 120 100 350 Unit Cost $25.00 28.50 39.00 Total cost 5 3,250 3,420 3,900 $10,570 A year-end physical inventory, however, shows only 310 of these trees on hand. In its financial statements, Mary's Nursery values its inventories at the lower-of-cost-or-market. At year-end, the per-unit replacement cost of this tree is $40 (Use $3,500 as the level of materiality in deciding whether to debit losses to Cost of Goods Sold or to a separate loss account) Required: a. Prepare the journal entries required to adjust the inventory records at year-end, assuming that Mary's Nursery uses (1) Average cost, (2) Last-in, first-out b. Prepare the journal entries required to adjust the inventory records at year-end, assuming that Mary's Nursery uses the first first out method. However, the replacement cost of the trees at year-end is $20 aplece, rather than the $40 stated originally Make separate journal entries to record (t) the shrinkage losses and (2) the restatement of the inventory at a market value lower than cost Record the shrinkage losses first) Complete this question by entering your answers in the tabs below. Required A Required Prepare the journal entries required to adjust the inventory records at year-end, assuming that Mary's Nursery uses (1) Average cost, (2) Last-in, first-out. (Ir no entry is required for a transactio/event, select "No journal entry required in the first account field) View transaction list Journal entry worksheet 24 stv ? 8 2 N 3 4 4 5 6 7 2 Q W E R T Y U C S D F G . out method. However, the replacement cost of the trees at year-end is $20 apiece, rather than the $40 stated originally. (Make separate journal entries to record (1) the shrinkage losses and (2) the restatement of the inventory at a market value lower than cost Record the shrinkage losses first) Complete this question by entering your answers in the tabs below. 3s Required Required Prepare the journal entries required to adjust the inventory records at year-end, assuming that Mary's Nursery uses (1) Average cost, (2) Last-in, first-out. (If no entry is required for a transaction/event, select "No journal entry required in the fiest account field.). View transaction lit Journal entry worksheet 12 Record the shrinkage loss of 40 trees using the average cost assumption Note: Enter debts before credits Transaction General Journal Debit Credit Record entry Clear entry View general journal Required 24 tv 3 Y T u C Q W R E S D F G