Uusbon Hop Fresh Trade Marthas recently had lackluster sales. The rate of inventory tumover has dropped, and the merchandise is gathering dust. At the same time, competition has forced Freshwater's suppliers to lower the prices that Freshwater wil pay when replaces to inventory it is now December 31, 2016. and the net realitzable value of Freshwater's ending inventory is $75,000 below what the company actually paid for the goods, which was $210.000. Before any times at the end of the period, the cost of Goods Sold account has a balance of $340,000 Read the requirements Requirements. What counting action should Freshwater take in this situation? Freshwater should apply the lower of color market rule to account for inventories. The ne realizable value of ending inventory is less than Freshwater's actual cos, so Freshwater must write the inventory down to netrable value Requirement b. Give any journal entry required. Record debits first, the credits. Ele explanations from any oumal entries. It no entry is required, led "No entry required in the first call in the Account column and leave atomer cells Jornal Entry Requirements Date Accounts Debit Credit Dec 31 What counting action should Freshwater take in this situation? b. Give any oumalantry required 6. Al 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? .. Discuss the accounting principle or concept that is most relevant to this Suation Print Done Choose from any list or enter any number in the input fields and then click Check Answer P6-64A (similar to) Question Help Freshwater 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 Freshwater's suppliers to lower the prices that Freshwater will pay when it replaces its inventory. It is now December 31, 2018, and the net realizable value of Freshwater's ending inventory is $75,000 below what the Bompany actually paid for the goods, which was $210,000. Before any adjustments at the end of the period, the Cost of Goods Sold account has a balance of $840,000 Read the requirements Freshwater's actual Requirement a. What accounting action should Freshwater take in this situation? Freshwater should apply the lower-of-cost-or-market rule to account for inventories. The net realizable value of ending inventory is less than cost, so Freshwater must write the inventory down to net realizable value. 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 Dec 31 Choose from any list or enter any number in the input fields and then click Check Answer unting ac i Requirements lower- is les: ite the in urnal en I in the no en a. What accounting action should Freshwater 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. Print Done
