lower-of-LIFO-cost-or-market.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Question
Splish Brothers, Inc. values its inventory at the lower-of-LIFO-cost-or-market. The following information is available from the company’s inventory records as of December 31, 2020.
|
Item
|
Quantity
|
Unit
Cost |
Replacement
Cost/Unit |
Estimated Selling
Price/Unit |
Completion & Disposal
Cost/Unit |
Normal Profit
Margin/Unit |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| X490 | 8,976 | $11.00 | $10.52 | $12.32 | $2.64 | $2.99 | ||||||||||
| X512 | 4,356 | 6.16 | 6.60 | 7.83 | 0.22 | 1.58 | ||||||||||
| X682 | 15,840 | 16.72 | 16.37 | 27.76 | 2.86 | 7.92 | ||||||||||
| Z195 | 11,000 | 12.54 | 12.32 | 17.42 | 1.23 | 5.06 | ||||||||||
| Z846 | 7,568 | 10.56 | 11.22 | 12.28 | 1.85 | 0.97 |
(a)
Correct answer icon
Your answer is correct.
Calculate the lower-of-cost-or-market using the individual-item approach. (Round answers to 2 decimal places, e.g. 52.75.)
(b)
Partially correct answer icon
Your answer is partially correct.
Show the journal entries Splish Brothers, Inc. will need to make in order to write down the ending inventory from cost to market. Assume this is Splish Brothers’s first year of operations. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.)
|
Account Titles and Explanation
|
Debit
|
Credit
|
|---|---|---|
| Cost of Goods sold Method: | ||
|
enter an account title
|
enter a debit amount
|
enter a credit amount
|
|
enter an account title
|
enter a debit amount
|
enter a credit amount
|
| Loss method: | ||
|
enter an account title
|
enter a debit amount
|
enter a credit amount
|
|
enter an account title
|
enter a debit amount
|
enter a credit amount
|
Transcribed Image Text:Splish Brothers, Inc. values its inventory at the lower-of-LIFO-cost-or-market. The following information is available from the
company's inventory records as of December 31, 2020.
Unit
Replacement
Estimated Selling
Completion & Disposal
Normal Profit
Item
Quantity
Cost
Cost/Unit
Price/Unit
Cost/Unit
Margin/Unit
X490
8,976
$11.00
$10.52
$12.32
$2.64
$2.99
X512
4,356
6.16
6.60
7.83
0.22
1.58
X682
15.840
16.72
16.37
27.76
2.86
7.92
Z195
11,000
12.54
12.32
17.42
1.23
5.06
Z846
7,568
10.56
11.22
12.28
1.85
0.97
(a)
Your answer is correct.
Calculate the lower-of-cost-or-market using the individual-item approach. (Round answers to 2 decimal places, e.g. 52.75.)
Lower-of-Cost-or-Market
(Per unit basis)
X490
2$
9.68
X512
6.16
X682
$
16.72
X195
$
12.32
X846
2$
10.43
eTextbook and Media
List of Accounts
Attempts: unlimited
(b)
Your answer is partially correct.
Show the journal entries Splish Brothers, Inc. will need to make in order to write down the ending inventory from cost to market.
Assume this is Splish Brothers's first year of operations. (Credit account titles are automatically indented when amount is entered. Do
not indent manually. Round answers to 0 decimal places, e.g. 5,275.)
Account Titles and Explanation
Debit
Credit
Cost of Goods sold Method:
Cost of Goods Sold
26588
Allowance to Reduce Inventory to Market
26588
Loss method:
Loss Due to Market Decline of Inventory
26588
Allowance to Reduce Inventory to Market
26588
eTextbook and Media
List of Accounts
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Attempts: unlimited
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