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In Year 1, Moss Company signed a contract with a supplier to purchase 66,000 subassemblies at $30 each during Year 2. When the contract was signed, the contract price was less than the net realizable value of the inventory. The company uses the FIFO method to account for inventory. Assume Moss Company uses à periodic inventory system. Required a. The cost of subassemblies has declined, and the estimated net realizable value is now $1,870,000 on December 31 of Year 1. Prepare any year-end entry required for this cost decline b. The subassemblies are received in Year 2 when the net realizable value is estimated at $1,870,000. The contract was paid in full in cashe Prepare the required purchase entry in Year 2 Account Name Cr. To record the decline in cost of subassemblies To record the purchase of subrisemties

In Year 1, Moss Company signed a contract with a supplier to purchase 66,000 subassemblies at $30 each during Year 2. When the contract was signed, the contract price was less than the net realizable value of the inventory. The company uses the FIFO method to account for inventory. Assume Moss Company uses à periodic inventory system. Required a. The cost of subassemblies has declined, and the estimated net realizable value is now $1,870,000 on December 31 of Year 1. Prepare any year-end entry required for this cost decline b. The subassemblies are received in Year 2 when the net realizable value is estimated at $1,870,000. The contract was paid in full in cashe Prepare the required purchase entry in Year 2 Account Name Cr. To record the decline in cost of subassemblies To record the purchase of subrisemties

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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Accounting for Inventory Transactions with Purchase Commitments In Year 1, Moss Company signed a contract with a supplier to purchase 66,000 subassemblies at $30 each during Year 2. When the contract was signed, the contract price was less than the net realizable value of the inventory. The company uses the FIFO method to account for inventory. Assume Moss Company uses à periodic inventory system. Required a. The cost of subassemblies has declined, and the estimated net realizable value is now $1,870,000 on December 31 of Year 1. Prepare any year-end entry required for this cost decline b. The subassemblies are received in Year 2 when the net realizable value is estimated at $1,870,000. The contract was paid in full in cash; Prepare the required purchase entry in Year 2 Account Name Dr. Cr. - B To recond the decline in cost of subassemblies
Transcribed Image Text:Accounting for Inventory Transactions with Purchase Commitments In Year 1, Moss Company signed a contract with a supplier to purchase 66,000 subassemblies at $30 each during Year 2. When the contract was signed, the contract price was less than the net realizable value of the inventory. The company uses the FIFO method to account for inventory. Assume Moss Company uses à periodic inventory system. Required a. The cost of subassemblies has declined, and the estimated net realizable value is now $1,870,000 on December 31 of Year 1. Prepare any year-end entry required for this cost decline b. The subassemblies are received in Year 2 when the net realizable value is estimated at $1,870,000. The contract was paid in full in cash; Prepare the required purchase entry in Year 2 Account Name Dr. Cr. - B To recond the decline in cost of subassemblies
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