**LO 5-2** **Exercise 5-11A: Lower-of-cost-or-market rule**Brooks Company carries three inventory items. The following information pertains to the ending inventory.| Item | Quantity | Unit Cost | Unit Market Value ||------|----------|-----------|-------------------|| A | 120 | $60 | $55 || F | 170 | 80 | 75 || K | 110 | 30 | 40 |**Required:**a. Determine the ending inventory that Brooks will report on the balance sheet, assuming that it applies the lower-of-cost-or-market rule to individual inventory items.b. Prepare the necessary journal entry, assuming the decline in value was immaterial.

Introduction:- Brooks company Carries three inventory systems Inventory should be valued at cost or…

Exercise 5-11A Lower-of-cost-or-market rule Brooks Company carries three inventory items. The following information pertains to the ending inventory. Item A F K Quantity 120 170 110 Unit Cost $60 80 30 Unit Market Value $55 75 40 Required a. Determine the ending inventory that Brooks will report on the balance sheet, assuming that it applies the lower-of-cost-or-mar rule to individual inventory items. b. Prepare the necessary journal entry, assuming the decline in value was immaterial.

Exercise 5-11A Lower-of-cost-or-market rule Brooks Company carries three inventory items. The following information pertains to the ending inventory. Item A F K Quantity 120 170 110 Unit Cost $60 80 30 Unit Market Value $55 75 40 Required a. Determine the ending inventory that Brooks will report on the balance sheet, assuming that it applies the lower-of-cost-or-mar rule to individual inventory items. b. Prepare the necessary journal entry, assuming the decline in value was immaterial.

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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Date August 1 August 4 August 11 August 13 August 20 August 26 August 29 Transactions Beginning inventory Sale ($140 each) Purchase Sale ($155 each) Purchase Sale ($165 each) Purchase ∞++ Units 8 Required 1 Required 2 5 10 8 10 11 10 Unit Cost $143 133 123 Required 3 113 For the specific identification method, the August 4 sale consists of rackets from beginning inventory, the August 13 sale consists of rackets from the August 11 purchase, and the August 26 sale consists of one racket from beginning inventory and 10 rackets from the August 20 purchase. Required: 1. Calculate ending inventory and cost of goods sold at August 31, using the specific identification method. 2. Using FIFO, calculate ending inventory and cost of goods sold at August 31. 3. Using LIFO, calculate ending inventory and cost of goods sold at August 31. 4. Using weighted-average cost, calculate ending inventory and cost of goods sold at August 31. 5. Calculate sales revenue and gross profit under each of the four…