Cullumber Company uses a periodic inventory system and the average cost method. At December 31, 2025, the following information has been compiled for its finished goods inventory: Replacement value Cost Expected selling price Normal profit margin Selling costs $13100 $14500 $15100 15% 5% of expected selling price After applying LCNRV, Cullumber, which uses the cost of goods sold method to record inventory write-downs, will make an entry Odebiting Cost of Goods Sold for $155. O crediting Cost of Goods Sold for $1400. O debiting Inventory Loss for $600. O crediting Inventory for $600.

Cullumber Company uses a periodic inventory system and the average cost method. At December 31, 2025, the following information has been compiled for its finished goods inventory: Replacement value Cost Expected selling price Normal profit margin Selling costs $13100 $14500 $15100 15% 5% of expected selling price After applying LCNRV, Cullumber, which uses the cost of goods sold method to record inventory write-downs, will make an entry Odebiting Cost of Goods Sold for $155. O crediting Cost of Goods Sold for $1400. O debiting Inventory Loss for $600. O crediting Inventory for $600.

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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Kiddie World uses a periodic inventory system and the retail Inventory method to estimate ending inventory and cost of goods sold. The following data are available at the end of the year. Beginning inventory Net purchases Freight-in Net markups Net markdowns Net sales Cost $ 380,000 895,000 68,200 Beginning inventory Plus. Net purchases Freight-in Net markups Goods available for sale Less: Net markdowns Goods available for sale Cost-to-retail percentage Less: Net sales Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold Retail $ 520,000 1,290,000 Estimate ending Inventory and cost of goods sold using the conventional method. Note: Round ratio calculation to 2 decimal places (1.e., 0.1234 should be entered as 12.34%.) $ 56,000 26,000 1,240,000 Cost 380,000 $ 895,000 68,200 1,343,200 $ Retail 520,000 1,290,000 56,000 1,866,000 (26,000) 1,840,000 (1,240,000) 600,000 Cost to Retail Ratio 4
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