Late in the year, Software City began carrying WordCrafter, a new word processing software program. At December 31, Software City's perpetual inventory records included the following cost layers in its inventory of WordCrafter programs:Purchase DateQuantity10November 14Unit Cost$420330Total Cost$4,2007,260December 122232Total available for sale at December 31$ 11,460Required:a. At December 31, Software City takes a physical inventory and finds that all 32 units of WordCrafter are on hand. However, the current replacement cost (wholesale price) of this product is only $260 per unit.1. Prepare the entries to record the write-down of this inventory to the lower-of-cost-or-market at December 31. (Company policy is to charge LCM adjustments of less than $2,000 to Cost of Goods Sold and larger amounts to a separate loss account.)2. Prepare the entries to record the cash sale of 26 WordCrafter programs on January 9, at a retail price of $380 each. Assume that Software City uses the FIFO flow assumption.b. Now assume that the current replacement cost of the WordCrafter programs is $330 each. A physical inventory finds only 23 of these programs on hand at December 31. (For this part, return to the original information and ignore what you did in part a.)1. Prepare the journal entry to record the shrinkage loss assuming that Software City uses the FIFO flow assumption.2. Prepare the journal entry to record the shrinkage loss assuming that Software City uses the LIFO flow assumption.Complete this question by entering your answers in the tabs below.Req A1View transaction listReq A2Prepare the entries to record the cash sale of 26 WordCrafter programs on January 9, at a retail price of $380 each. Assume thatSoftware City uses the FIFO flow assumption.Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.Journal entry worksheet1TransactionaReq B12Note: Enter debits before credits.Record the cash sale of 26 WordCrafter programs at $380 each.Req B2General JournalDebitCredit>

Name: Late in the year, Software City began carrying WordCrafter, a new wor
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Description: Late in the year, Software City began carrying WordCrafter, a new word processing software program. At December 31, Software City's perpetual inventory records included the following cost layers in its inventory of WordCrafter programs:Purchase Date

The perpetual inventory system uses technology to track and update inventory records following each…

Business

Accounting

1. Prepare the entries to record the write-down of this inventory to the lower-of-cost-or-market at December 31. (Company policy is to charge L 2. Prepare the entries to record the cash sale of 26 WordCrafter programs on January 9, at a retail price of $380 each. Assume that Software C Now assume that the current replacement cost of the WordCrafter programs is $330 each. A physical inventory finds only 23 of these programs 1. Prepare the journal entry to record the shrinkage loss assuming that Software City uses the FIFO flow assumption 2. Prepare the journal entry to record the shrinkage loss assuming that Software City uses the LIFO flow assumption.

1. Prepare the entries to record the write-down of this inventory to the lower-of-cost-or-market at December 31. (Company policy is to charge L 2. Prepare the entries to record the cash sale of 26 WordCrafter programs on January 9, at a retail price of $380 each. Assume that Software C Now assume that the current replacement cost of the WordCrafter programs is $330 each. A physical inventory finds only 23 of these programs 1. Prepare the journal entry to record the shrinkage loss assuming that Software City uses the FIFO flow assumption 2. Prepare the journal entry to record the shrinkage loss assuming that Software City uses the LIFO flow assumption.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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