1. Teel Distribution Co. has determined its December 31, 2007 inventory on a FIFObasis at $250,000. Information pertaining to that inventory follows:$255,000|Estimated selling priceEstimated cost of disposal/completion10,000Normal profit marginCurrent replacement cost30,000225,000Teel records losses that result from applying the lower-of-cost-or-market rule. AtDecember 31, 2007, the loss that Teel should recognize isb. $5,000c. $20,000d. $25,000

The Inventory valuation and loss on valuation has been computed as above.

Answered: 1. Teel Distribution Co. has determined…

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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Pomelo Company has the policy of valuing inventory at the lower of cost and net realizable value using the allowance method. Allowance to Reduce Inventory to NRV account at December 31, 2021 before adjustment is P86,000. Analysis of the net realizable value and costs of their products on December 31, 2021 revealed a valuation at the lower of cost and net realizable value of P1,200,000 applied to the individual products. The total cost of its products on that date is P1,300,000. How much is the loss from decline in NRV that Pomelo Company should report in profit or loss for the year ended December 31, 2021? *
At 12/31/20, the end of Lincoln Company's first year of business, inventory was $6,100 and $5,100 at cost and at market, respectively. Following is data relative to the 12/31/21 inventory of Lincoln: Original Net Net Realizable Appropriate Cost Replacement Realizable Value Less Inventory Item Per Unit Cost Value Normal Profit Value A $ .65 $ .45 B .45 .40 C .70 .75 D .75 .65 E .90 .85 Selling price is $1.00/unit for all items. Disposal costs amount to 10% of selling price and a "normal" profit is 30% of selling price. There are 1,500 units of each…
Kiko Company has the policy of valuing inventory at the lower of cost and net realizable value using the allowance method. Allowance to Reduce Inventory to NRV account at December 31, 2021 before adjustment is P86,000. Analysis of the net realizable value and costs of their products on December 31, 2021 revealed a valuation at the lower of cost and net realizable value of P1,200,000 applied to the individual products. The total cost of its products on that date is P1,300,000.How much is the loss from decline in NRV that Kiko Company should report in profit or loss for the year ended December 31, 2021?
The management of Aspen company believes that under the lower of cost or market rule, the 2 items below are reported in ending inventory at $129,500. Inventory cost is reported using LIFO. Item A: 2,260 in inventory; cost is $23 each; replacement cost is $15 each; estimated sale price is $32 each; estimated distribution cost is $2 each: and normal profit is 10% of sale price. İtem B: 1,540 in inventory; cost is $52 each: replacement cost is $35 each; estimated sale price is $95 each: estimated distribution cost is $25 each: and normal profit is 20% of sale price. a. Compute your inventory valuation by item and in total for the Aspen Company inventory reported above. Inventory valuation for Item A Inventory valuation for Item B Total inventory valuation b. Prepare the entry, if any, to report inventory at the lower-of-cast-or-market. Assume that all adjustments directly impact cost of goods sold and inventory.
Power Company's ending inventory is understated by P7,000. The effects of this error in the current year's cost of goods sold and net income, respectively are.
A3
2.2. During 2021, Gamma Ltd discovered that some of their products sold during 2020 were incorrectly included in inventory as 31 December 2020 at R6 500. Assume a tax rate of 30%. Assume that the prior period error effect is considered to be material. Gamma Ltd.'s accounting records are as follows: 2021 Sales Cost of sales Profit before tax 208 000 (173 500) 35 000 (10 500) 24 500 2020 147 000 (107 000) 40 000 (12 000) 28 000 Taxation Profit The profit for 2021 includes R13 500 for the error made in opening inventory Additional information: 2020 opening retained earnings was R40 000 and closing retained earnings was R68 000. Gamma's income tax rate was 30% in 2021 as well as in 2020. It had no other income or expenses. Gamma Ltd has R10 000 of share capital throughout 2020 and 2021, as well as retained earnings. REQUIRED: Disclose the effect of the error in the financial statements for the year ended 31 December 2021
During 20x3, Pryor Company changed its inventory method from the LIFO to FIFO. The beginning inventory under FIFO is $20,000 higher than under LIFO. Prepare the journal entry to record this accounting change. Ignore income tax.
Refer to the photo
Poe, Co. uses LIFO for its inventory valuation. The original cost of Item #BB-8, the only inventory item of Poe, was $12,000. The current selling price and replacement cost are $13,500 and $9,500, respectively. Costs to sell are estimated to be $2,700. The normal profit margin is 10% of the original cost.
s

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