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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

FINANCIAL ACCOUNTING
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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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
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
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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