Problem 7-8: The Cyber Corporation The Cyber Corporation is a manufacturer of MP3 players. Immediately prior to the year end, a competitor released a superior product and it is now apparent that the finished goods inventory is worthless. The following information is available from the unadjusted trial balance: Account Amount Revenue 1000 Inventory 301 Cost of Goods Sold 800 Required: 1. Compute Gross Margin based upon the data from the unadjusted trial balance. 2. Assume that as a result of the competing product, the market value of the ending inventory is $101. Prepare a journal entry to record inventory at the lower of cost or market. 3. Calculate gross margin following the adjustment in part 2. Upon completion, enter the following data here: Gross margin based upon the unadjusted trial balance: Gross margin following the inventory write down: Journal entry to record write down:

Problem 7-8: The Cyber Corporation The Cyber Corporation is a manufacturer of MP3 players. Immediately prior to the year end, a competitor released a superior product and it is now apparent that the finished goods inventory is worthless. The following information is available from the unadjusted trial balance: Account Amount Revenue 1000 Inventory 301 Cost of Goods Sold 800 Required: 1. Compute Gross Margin based upon the data from the unadjusted trial balance. 2. Assume that as a result of the competing product, the market value of the ending inventory is $101. Prepare a journal entry to record inventory at the lower of cost or market. 3. Calculate gross margin following the adjustment in part 2. Upon completion, enter the following data here: Gross margin based upon the unadjusted trial balance: Gross margin following the inventory write down: Journal entry to record write down:

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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Problem #5 (Lower of Cost or Market - LCM) Melissa's Wing-Bang Washing Machine Mfg. makes washing machines. Most of Melissa's washing machines are standard models and are sold on the basis of catalog prices. The company has adopted a lower of FIFO cost or market approach applied to inventory on an individual item basis. At December 31, 2021 the following finished washing machines appear in the company's inventory. Finished Washers - Models --> A $ 700 $ B D 800 $ 2021 catalog selling price FIFO cost per inventory list Est. cost to re-manufacture (REPCO) Costs of disposal 750 $ 1,000 2$ 460 $ 465 $ 640 $ 740 440 $ 480 $ 630 $ 810 150 $ 160 $ 180 $ 200 "Normal" gross profit margin # of units in 12-31-21 inventory 15% 20% 22% 24% 400 200 100 100 Calculate the: a. "Designated" market for each item b. LCM unit cost assigned to each item @ 12-31-21 c. LCM total inventory value d. Total amount of the inventory "write-down" @ 12-31-21
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Brief Exercise 6-7 (Algo) Calculate ending inventory and cost of goods sold using weighted-average cost (LO6-3) During the year, Wright Company sells 565 remote-control airplanes for $110 each. The company has the following inventory purchase transactions for the year. Date January 1 May 5 November 3 Weighted Average Cost Beginning Inventory Purchases: Transaction Beginning inventory Purchase Purchase Calculate ending inventory and cost of goods sold for the year, assuming the company uses weighted-average cost. (Round your average cost per unit to 4 decimal places.) May 5 November 3 Total Number of Unit Units Cost 60 $63 295 66 245 71 600 60 295 245 600 Cost of Goods Available for Sale Number Average Cost Cost of Goods Number of units per unit Available for of units Sale sold $ Total Cost $3,780 19,470 17,395 $40,645 3,780 19,470 17,395 $ 40,645 Cost of Goods Sold - Weighted Average Cost Average Cost Cost of Goods per Unit Sold Ending Inventory - Weighted Average Cost Number of units…
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