Cost Allocation and Lower-of-Cost-or-MarketDouglas Company's beginning inventory and purchases during the fiscal year ended December 31, 20--, were as shown. UnitsUnit PriceTotal CostJanuary 1, 20--Beginning inventory1,100$8.00 $8,800 March 51st purchase900 9.00 8,100 April 162nd purchase400 9.50 3,800 June 33rd purchase700 10.25 7,175 August 184th purchase600 11.00 6,600 September 135th purchase800 12.00 9,600 November 146th purchase400 14.00 5,600 December 37th purchase500 14.05 7,025 5,400 $56,700 There are 1,000 units of inventory on hand on December 31.Required:1. Calculate the total amount to be assigned to the ending inventory and cost of goods sold on December 31 under each of the following methods: Cost of Goods SoldCost of Ending Inventorya. FIFO$fill in the blank 1$fill in the blank 2b. LIFO$fill in the blank 3$fill in the blank 4c. Weighted-average (round calculations to two decimal places)$fill in the blank 5$fill in the blank 62. Assume that the market price per unit (cost to replace) of Douglas's inventory on December 31 was $13. Calculate the total amount to be assigned to the ending inventory on December 31 under each of the following methods:a. FIFO lower-of-cost-or-market$fill in the blank 7b. Weighted-average lower-of-cost-or-market$fill in the blank 83. Prepare required entries to apply:a. FIFO lower-of-cost-or-market b. Weighted-average lower-of-cost-or-market If no entry is required, select "No Entry Required". DescriptionDebitCredita.Loss on Write-Down of Inventory fill in the blank 10fill in the blank 11 Merchandise Inventory fill in the blank 13fill in the blank 14 b.No Entry Required fill in the blank 16fill in the blank 17 No Entry Required fill in the blank 19fill in the blank 20

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Description: Cost Allocation and Lower-of-Cost-or-MarketDouglas Company's beginning inventory and purchases during the fiscal year ended December 31, 20--, were as shown. UnitsUnit PriceTotal CostJanuary 1, 20--Beginning inventory1,100$8.00 $8,800 March 5

Jan 1, 20-- Beginning Inventory 1,100 8.00 8,800 March 5 1st purchase 900 9.00 8,100 April 16…

Answered: Cost Allocation and…

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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Cost Allocation and Lower-of-Cost-or-Market

Douglas Company's beginning inventory and purchases during the fiscal year ended December 31, 20--, were as shown.

		Units	Unit Price	Total Cost
January 1, 20--	Beginning inventory	1,100	$	8.00	$	8,800
March 5	1st purchase	900		9.00		8,100
April 16	2nd purchase	400		9.50		3,800
June 3	3rd purchase	700		10.25		7,175
August 18	4th purchase	600		11.00		6,600
September 13	5th purchase	800		12.00		9,600
November 14	6th purchase	400		14.00		5,600
December 3	7th purchase	500		14.05		7,025
		5,400			$	56,700

There are 1,000 units of inventory on hand on December 31.

Required:

1. Calculate the total amount to be assigned to the ending inventory and cost of goods sold on December 31 under each of the following methods:

	Cost of Goods Sold	Cost of Ending Inventory
a. FIFO	$fill in the blank 1	$fill in the blank 2
b. LIFO	$fill in the blank 3	$fill in the blank 4
c. Weighted-average (round calculations to two decimal places)	$fill in the blank 5	$fill in the blank 6

2. Assume that the market price per unit (cost to replace) of Douglas's inventory on December 31 was $13. Calculate the total amount to be assigned to the ending inventory on December 31 under each of the following methods:

a. FIFO lower-of-cost-or-market	$fill in the blank 7
b. Weighted-average lower-of-cost-or-market	$fill in the blank 8

3. Prepare required entries to apply:

a. FIFO lower-of-cost-or-market
b. Weighted-average lower-of-cost-or-market

If no entry is required, select "No Entry Required".

	Description	Debit	Credit
a.	Loss on Write-Down of Inventory	fill in the blank 10	fill in the blank 11
	Merchandise Inventory	fill in the blank 13	fill in the blank 14

b.	No Entry Required	fill in the blank 16	fill in the blank 17
	No Entry Required	fill in the blank 19	fill in the blank 20

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