Complete the last three columns in the 12/31/21 schedule below based upon the lower-of-cost-or-market rules. Item A B C D E $ Original Cost Per Unit $0.85 0.40 0.65 0.80 0.70 Replacement Cost $0.35 0.35 0.70 0.70 0.65 Net Realizable Value I $ Net Realizable Value Less Normal Profit
Complete the last three columns in the 12/31/21 schedule below based upon the lower-of-cost-or-market rules. Item A B C D E $ Original Cost Per Unit $0.85 0.40 0.65 0.80 0.70 Replacement Cost $0.35 0.35 0.70 0.70 0.65 Net Realizable Value I $ Net Realizable Value Less Normal Profit
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 24CE: Inventory Costing: Average Cost Refer to the information for Filimonov Inc. and assume that the...
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Question
320.
Subject :- Accounting
![Complete the last three columns in the 12/31/21 schedule below based upon the lower-of-cost-or-market rules.
Item
A
B
C
D
E
$
12/31/21
Original Cost
Per Unit
12/31/21
$0.85
0.40
0.65
0.80
0.70
Date Account Titles and Explanation
Cost of Goods Sold
Replacement
Cost
(To record cost of goods sold)
$0.35
0.35
(To record profit/ loss)
0.70
Allowance to Reduce Inventory to Market
0.70
0.65
Loss Due to Decline of Inventory to Market V
Allowance to Reduce Inventory to Market
How are inventory losses disclosed on the income statement?
$
Net Realizable
Value
Debit
4
Inventory losses can be disclosed separately below gross profit in operating expenses
$
Net Realizable Value
Less Normal Profit
Credit
V or they can be shown as part of](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd7b6ce77-7d1f-42c7-90fc-6e082dc1db1b%2Fb65ab04c-87de-4582-8557-1c094d8c53b4%2Fd2lvqbi_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Complete the last three columns in the 12/31/21 schedule below based upon the lower-of-cost-or-market rules.
Item
A
B
C
D
E
$
12/31/21
Original Cost
Per Unit
12/31/21
$0.85
0.40
0.65
0.80
0.70
Date Account Titles and Explanation
Cost of Goods Sold
Replacement
Cost
(To record cost of goods sold)
$0.35
0.35
(To record profit/ loss)
0.70
Allowance to Reduce Inventory to Market
0.70
0.65
Loss Due to Decline of Inventory to Market V
Allowance to Reduce Inventory to Market
How are inventory losses disclosed on the income statement?
$
Net Realizable
Value
Debit
4
Inventory losses can be disclosed separately below gross profit in operating expenses
$
Net Realizable Value
Less Normal Profit
Credit
V or they can be shown as part of
![At 12/31/20, the end of Wildhorse Company's first year of business, inventory was $6.500 and $5,100 at cost and at market,
respectively.
Following is data relative to the 12/31/21 inventory of Jenner:
Item
A
B
C
D
E
S
Date
2/31/20
Original Cost
Per Unit
$0.85
0.40
Item
0.65
A
0.80
B
0.70
hs
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 item in the 12/31/21 inventory.
C
Replacement
Cost
Prepare the entry at 12/31/20 necessary to implement the lower-of-cost-or-market procedure assuming Wildhorse uses a
contra account for its balance sheet. (Credit account titles are automatically indented when the amount is entered. Do not indent
manually.)
$0.35
0.35
0.70
0.70
0.65
Date Account Titles and Explanation
Account Titles and Explanation
12/31/20 Loss Due to Decline of Inventory to Market
Loss Due to Decline of Inventory to Market
Prepare the entry at 12/31/20 necessary to implement the lower-of-cost-or-market procedure assuming Wildhorse uses a
contra account for its balance sheet. (Credit account titles are automatically indented when the amount is entered. Do not indent
manually.)
Original Cost
Per Unit
Allowance to Reduce Inventory to Market
$0.85
0.40
Complete the last three columns in the 12/31/21 schedule below based upon the lower-f-cost-or-market rules.
0.65
0.80
Replacement
Cost
$0.35
0.35
v
0.70
0.70
Debit
$
1400
Debit
1400
Credit
Net Realizable
Value
$
Credit
Click to add
1400
Net Realizable Value
Less Normal Profit](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd7b6ce77-7d1f-42c7-90fc-6e082dc1db1b%2Fb65ab04c-87de-4582-8557-1c094d8c53b4%2Fi9e6keo_processed.jpeg&w=3840&q=75)
Transcribed Image Text:At 12/31/20, the end of Wildhorse Company's first year of business, inventory was $6.500 and $5,100 at cost and at market,
respectively.
Following is data relative to the 12/31/21 inventory of Jenner:
Item
A
B
C
D
E
S
Date
2/31/20
Original Cost
Per Unit
$0.85
0.40
Item
0.65
A
0.80
B
0.70
hs
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 item in the 12/31/21 inventory.
C
Replacement
Cost
Prepare the entry at 12/31/20 necessary to implement the lower-of-cost-or-market procedure assuming Wildhorse uses a
contra account for its balance sheet. (Credit account titles are automatically indented when the amount is entered. Do not indent
manually.)
$0.35
0.35
0.70
0.70
0.65
Date Account Titles and Explanation
Account Titles and Explanation
12/31/20 Loss Due to Decline of Inventory to Market
Loss Due to Decline of Inventory to Market
Prepare the entry at 12/31/20 necessary to implement the lower-of-cost-or-market procedure assuming Wildhorse uses a
contra account for its balance sheet. (Credit account titles are automatically indented when the amount is entered. Do not indent
manually.)
Original Cost
Per Unit
Allowance to Reduce Inventory to Market
$0.85
0.40
Complete the last three columns in the 12/31/21 schedule below based upon the lower-f-cost-or-market rules.
0.65
0.80
Replacement
Cost
$0.35
0.35
v
0.70
0.70
Debit
$
1400
Debit
1400
Credit
Net Realizable
Value
$
Credit
Click to add
1400
Net Realizable Value
Less Normal Profit
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