A) LC Company is deciding whether to use the LIFO or FIFO method. Based on the following data, determine inventory cost at the end of 2021 under LIFO and under FIFO.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Topic Video
Question
A) LC Company is deciding whether to use the LIFO or FIFO method. Based on the
following data, determine inventory cost at the end of 2021 under LIFO and under FIFO.
Units Unit Cost
500
$12.00
Purchases
600
11.00
400
11.50
450
12.50
250
13.00
Sold in 2021
1/1/21
3/5/21
7/12/21
10/18/21
12/22/21
1,600 |
B) After determining inventory cost (per part A above), LC Company will adjust its
inventory to market or net realizable value (NRV). Using the data below for 12/31/21,
1- calculate the market value and the NRV of the 2021 ending inventory
2- show lower of cost or market and lower of cost or NRV, for LIFO and FIFO, as appropriate.
3- If an adjustment is necessary, prepare journal entries to adjust inventory under the direct and
indirect methods.
Selling Price $16 Selling Cost 3 Normal Profit 4 Replacement Cost $8 Show all calculations for
parts A & B.
Transcribed Image Text:A) LC Company is deciding whether to use the LIFO or FIFO method. Based on the following data, determine inventory cost at the end of 2021 under LIFO and under FIFO. Units Unit Cost 500 $12.00 Purchases 600 11.00 400 11.50 450 12.50 250 13.00 Sold in 2021 1/1/21 3/5/21 7/12/21 10/18/21 12/22/21 1,600 | B) After determining inventory cost (per part A above), LC Company will adjust its inventory to market or net realizable value (NRV). Using the data below for 12/31/21, 1- calculate the market value and the NRV of the 2021 ending inventory 2- show lower of cost or market and lower of cost or NRV, for LIFO and FIFO, as appropriate. 3- If an adjustment is necessary, prepare journal entries to adjust inventory under the direct and indirect methods. Selling Price $16 Selling Cost 3 Normal Profit 4 Replacement Cost $8 Show all calculations for parts A & B.
Expert Solution
steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Accounting for Merchandise Inventory
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education