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Recording Inventory at Lower of Cost or Net Realizable Value The records of Loren Company show the following inventory data. Cost Year 1 Beginning inventory $24,000 Year 1 Ending inventory 30,000 Year 2 Ending inventory 48,000 Year 3 Ending inventory 24,000 Year 4 Ending inventory 72,000 Year 5 Ending inventory 48,000 Year 6 Ending inventory. 60,000 Net Realizable Value $24,000 36,000 45,000 18,000 60.000 42,000 66.000 Record the journal entry required for each year, Year 1 through Year 6, to apply the lower of cost or net realizable value rule to inventory assuming that the company adjusts inventory through the allowance account and adjusts equity through cost of goods sold. Assume that the allowance is only adjusted at the end of the year and that for each year, all of the beginning inventory is sold by the end of the year. Note: If a journal entry isn't required on any of the dates shown, select "N/A-debit" and "N/A-credit" as the account names and leave the Dr. and Cr. answers blank (zero).

Recording Inventory at Lower of Cost or Net Realizable Value The records of Loren Company show the following inventory data. Cost Year 1 Beginning inventory $24,000 Year 1 Ending inventory 30,000 Year 2 Ending inventory 48,000 Year 3 Ending inventory 24,000 Year 4 Ending inventory 72,000 Year 5 Ending inventory 48,000 Year 6 Ending inventory. 60,000 Net Realizable Value $24,000 36,000 45,000 18,000 60.000 42,000 66.000 Record the journal entry required for each year, Year 1 through Year 6, to apply the lower of cost or net realizable value rule to inventory assuming that the company adjusts inventory through the allowance account and adjusts equity through cost of goods sold. Assume that the allowance is only adjusted at the end of the year and that for each year, all of the beginning inventory is sold by the end of the year. Note: If a journal entry isn't required on any of the dates shown, select "N/A-debit" and "N/A-credit" as the account names and leave the Dr. and Cr. answers blank (zero).

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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Recording Inventory at Lower of Cost or Net Realizable Value The records of Loren Company show the following inventory data. Cost Year 1 Beginning inventory $24,000 Year 1 Ending inventory 30,000 Year 2 Ending inventory 48,000 Year 3 Ending inventory 24,000 Year 4 Ending inventory 72,000 Year 5 Ending inventory 48,000 Year 6 Ending inventory 60,000 Date Dec. 31, Year 1 N/A-debit Record the journal entry required for each year, Year 1 through Year 6, to apply the lower of cost or net realizable value rule to inventory assuming that the company adjusts inventory through the allowance account and adjusts equity through cost of goods sold. Assume that the allowance is only adjusted at the end of the year and that for each year, all of the beginning inventory is sold by the end of the year. • Note: If a journal entry isn't required on any of the dates shown, select "N/A-debit" and "N/A-credit" as the account names and leave the Dr. and Cr. answers blank (zero). Dec. 31, Year 2 Cost of Goods Sold N/A-credit To record adjustment. Dec. 31, Year 3 Cost of Goods Sold Net Realizable Value Dec. 31, Year 4 Cost of Goods Sold $24,000 36,000 Allowance to Reduce Inventory to Net Realizable Value To record adjustment. 45,000 18,000 60,000 42,000 66,000 Dec. 31, Year 5 Cost of Goods Sold Account Name Allowance to Reduce Inventory to Net Realizable Value To record adjustment. Dec. 31, Year 6 Cost of Goods Sold Allowance to Reduce Inventory to Net Realizable Value To record adjustment. Allowance to Reduce Inventory to Net Realizable Value To record adjustment. Allowance to Reduce Inventory to Net Realizable Value To record adjustment. > > Dr. 0 0 3,000 0 3,000 6,000 12,000 0 0 0 Cr. 0 0✔ 0 3,000 0 3,000 0 6,000 ✓ 0x 13,000 * 0x 0x
Transcribed Image Text:Recording Inventory at Lower of Cost or Net Realizable Value The records of Loren Company show the following inventory data. Cost Year 1 Beginning inventory $24,000 Year 1 Ending inventory 30,000 Year 2 Ending inventory 48,000 Year 3 Ending inventory 24,000 Year 4 Ending inventory 72,000 Year 5 Ending inventory 48,000 Year 6 Ending inventory 60,000 Date Dec. 31, Year 1 N/A-debit Record the journal entry required for each year, Year 1 through Year 6, to apply the lower of cost or net realizable value rule to inventory assuming that the company adjusts inventory through the allowance account and adjusts equity through cost of goods sold. Assume that the allowance is only adjusted at the end of the year and that for each year, all of the beginning inventory is sold by the end of the year. • Note: If a journal entry isn't required on any of the dates shown, select "N/A-debit" and "N/A-credit" as the account names and leave the Dr. and Cr. answers blank (zero). Dec. 31, Year 2 Cost of Goods Sold N/A-credit To record adjustment. Dec. 31, Year 3 Cost of Goods Sold Net Realizable Value Dec. 31, Year 4 Cost of Goods Sold $24,000 36,000 Allowance to Reduce Inventory to Net Realizable Value To record adjustment. 45,000 18,000 60,000 42,000 66,000 Dec. 31, Year 5 Cost of Goods Sold Account Name Allowance to Reduce Inventory to Net Realizable Value To record adjustment. Dec. 31, Year 6 Cost of Goods Sold Allowance to Reduce Inventory to Net Realizable Value To record adjustment. Allowance to Reduce Inventory to Net Realizable Value To record adjustment. Allowance to Reduce Inventory to Net Realizable Value To record adjustment. > > Dr. 0 0 3,000 0 3,000 6,000 12,000 0 0 0 Cr. 0 0✔ 0 3,000 0 3,000 0 6,000 ✓ 0x 13,000 * 0x 0x
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