Narra Company used the FIFO cost flow method i measuring raw material inventory. However, weighted average costs are used in valuing annual incremental layers. Composition of the December 31, 2020 inventory: Weighted average unit cost Total cost Units Base year inventory 2018 Incremental layer Incremental layer 9,000 3,000 2,000 100 110 900,000 330,000 250,000 2019 2020 125 14,000 1,480,000 Inventory, December 31, 2020 2021 Mar. 1 4,800 units were purchased at a unit cost of P135 for P648,000. Sept. 1 7,200 units were purchased at a unit cost of P140 for P1,008,000. A total of 15,000 units were used for production in 2021. 2022 Jan. 10 7,500 units were purchased at a unit cost of P145 for P1,087,500. May 10 5,500 units were purchased at a unit cost of P155 for P852,500. Dec. 29 7,000 units were purchased at a unit cost of P160 for P1,120,000. A total 16,000 units were used for production during 2022. Required: 1. Inventory December 31, 2021 2. Raw materials used for production during 2021 3. Inventory December 31, 2022 4. Raw materials used for production during 2022

Narra Company used the FIFO cost flow method i measuring raw material inventory. However, weighted average costs are used in valuing annual incremental layers. Composition of the December 31, 2020 inventory: Weighted average unit cost Total cost Units Base year inventory 2018 Incremental layer Incremental layer 9,000 3,000 2,000 100 110 900,000 330,000 250,000 2019 2020 125 14,000 1,480,000 Inventory, December 31, 2020 2021 Mar. 1 4,800 units were purchased at a unit cost of P135 for P648,000. Sept. 1 7,200 units were purchased at a unit cost of P140 for P1,008,000. A total of 15,000 units were used for production in 2021. 2022 Jan. 10 7,500 units were purchased at a unit cost of P145 for P1,087,500. May 10 5,500 units were purchased at a unit cost of P155 for P852,500. Dec. 29 7,000 units were purchased at a unit cost of P160 for P1,120,000. A total 16,000 units were used for production during 2022. Required: 1. Inventory December 31, 2021 2. Raw materials used for production during 2021 3. Inventory December 31, 2022 4. Raw materials used for production during 2022

Name: Problem 11-9 (AICPA Adapted)Narra Company used the FIFO cost flow met
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Description: Problem 11-9 (AICPA Adapted)Narra Company used the FIFO cost flow method imeasuring raw material inventory.However, weighted average costs are used in valuing annualincremental layers.Composition of the December 31, 2020 inventory:Weightedaverageuni

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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Question

Problem 11-9 (AICPA Adapted)
Narra Company used the FIFO cost flow method i
measuring raw material inventory.
However, weighted average costs are used in valuing annual
incremental layers.
Composition of the December 31, 2020 inventory:
Weighted
average
unit cost Total cost
Units
Base year inventory
Incremental layer
Incremental layer
2018
2019
9,000
3,000
2,000
100
110
900,000
330,000
250,000
2020
125
14,000
1,480,000
Inventory, December 31, 2020
2021
Mar. 1 4,800 units were purchased at a unit cost of P135
for P648,000.
Sept. 1 7,200 units were purchased at a unit cost of P140
for P1,008,000. A total of 15,000 units were used for
production in 2021.
2022
Jan. 10 7,500 units were purchased at a unit cost of P145
for P1,087,500.
May 10 5,500 units were purchased at a unit cost of P155
for P852,500.
Dec. 29 7,000 units were purchased at a unit cost of P160
for P1,120,000. A total 16,000 units were used for
production during 2022.
Required:
1. Inventory December 31, 2021
2. Raw materials used for production during 2021
3. Inventory - December 31, 2022
4. Raw materials used for production during 2022

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Suppose that Ivanhoe Depot developed the following information about its inventories in applying the lower-of-cost-or-net- realizable-value (LCNRV) basis in valuing inventories: Product A B C Cost $119000 83000 166000 NRV $125000 79000 168000 After Ivanhoe Depot applies the LCNRV rule, the value of the inventory reported on the balance sheet will be $368000. O $364000. O $372000. O $376000.
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