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Mary's Nursery uses a perpetual inventory system. At December 31, the perpetual inventory records indicate the following quantities of a particular blue spruce tree. First purchase (oldest) Second purchase Third purchase Total Quantity 130 120 100 350 Unit Cost $25.00 28.50 39.00 Total Cost $ 3,250 3,420 3.900 $ 10,570 A year-end physical inventory, however, shows only 310 of these trees on hand. In its financial statements, Mary's Nursery values its inventories at the lower-of-cost-or-market At year-end, the per-unit replacement cost of this tree is $40. (Use $3,500 as the level of materiality" in deciding whether to debit losses to Cost of Goods Soid or to a separate loss account.) Required: a. Prepare the journal entries required to adjust the inventory records at year-end, assuming that Mary's Nursery uses (1) Average cost, (2) Last- in, first-out

Mary's Nursery uses a perpetual inventory system. At December 31, the perpetual inventory records indicate the following quantities of a particular blue spruce tree. First purchase (oldest) Second purchase Third purchase Total Quantity 130 120 100 350 Unit Cost $25.00 28.50 39.00 Total Cost $ 3,250 3,420 3.900 $ 10,570 A year-end physical inventory, however, shows only 310 of these trees on hand. In its financial statements, Mary's Nursery values its inventories at the lower-of-cost-or-market At year-end, the per-unit replacement cost of this tree is $40. (Use $3,500 as the level of materiality" in deciding whether to debit losses to Cost of Goods Soid or to a separate loss account.) Required: a. Prepare the journal entries required to adjust the inventory records at year-end, assuming that Mary's Nursery uses (1) Average cost, (2) Last- in, first-out

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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Mary's Nursery uses a perpetual inventory system. At December 31, the perpetual inventory records indicate the following quantities of a particular blue spruce tree. First purchase (oldest) Second purchase Third purchase Total Quantity 130 120 100 350 Unit Cost $25.00 28.50 39.00 Total Cost $3,250 3,420 3,900 $ 10,570 A year-end physical inventory, however, shows only 310 of these trees on hand. In its financial statements, Mary's Nursery values its inventories at the lower-of-cost-or-market. At year-end, the per-unit replacement cost of this tree is $40. (Use $3,500 as the level of materiality in deciding whether to debit losses to Cost of Goods Sold or to a separate loss account.) Required: a. Prepare the journal entries required to adjust the inventory records at year-end, assuming that Mary's Nursery uses (1) Average cost, (2) Last- in, first-out.
Transcribed Image Text:Mary's Nursery uses a perpetual inventory system. At December 31, the perpetual inventory records indicate the following quantities of a particular blue spruce tree. First purchase (oldest) Second purchase Third purchase Total Quantity 130 120 100 350 Unit Cost $25.00 28.50 39.00 Total Cost $3,250 3,420 3,900 $ 10,570 A year-end physical inventory, however, shows only 310 of these trees on hand. In its financial statements, Mary's Nursery values its inventories at the lower-of-cost-or-market. At year-end, the per-unit replacement cost of this tree is $40. (Use $3,500 as the level of materiality in deciding whether to debit losses to Cost of Goods Sold or to a separate loss account.) Required: a. Prepare the journal entries required to adjust the inventory records at year-end, assuming that Mary's Nursery uses (1) Average cost, (2) Last- in, first-out.
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