Splish Company began operations in 2019 and determined its ending inventory at cost and at lower-of-LIFO cost-or-market at December 31, 2019, and December 31, 2020. This information is presented below: Lower-of-Cost-or-Market 12/31/19 12/31/20 (a) Prepare the journal entries required at December 31, 2019, and December 31, 2020, assuming that the inventory is recorded at market, and a perpetual inventory system (cost-of-goods-sold method) is used. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) 12/31/20 Cost $378,170 435,650 Date Account Titles and Explanation 12/31/19 $358,260 419,900 12/31/19 Date Account Titles and Explanation 12/31/20 (b) Prepare journal entries required at December 31, 2019, and December 31, 2020, assuming that the inventory is recorded at market under a perpetual system (loss method is used). (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Debit (c) Which of the two methods above provides the higher net income in each year? Credit Debit Credit
Splish Company began operations in 2019 and determined its ending inventory at cost and at lower-of-LIFO cost-or-market at December 31, 2019, and December 31, 2020. This information is presented below: Lower-of-Cost-or-Market 12/31/19 12/31/20 (a) Prepare the journal entries required at December 31, 2019, and December 31, 2020, assuming that the inventory is recorded at market, and a perpetual inventory system (cost-of-goods-sold method) is used. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) 12/31/20 Cost $378,170 435,650 Date Account Titles and Explanation 12/31/19 $358,260 419,900 12/31/19 Date Account Titles and Explanation 12/31/20 (b) Prepare journal entries required at December 31, 2019, and December 31, 2020, assuming that the inventory is recorded at market under a perpetual system (loss method is used). (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Debit (c) Which of the two methods above provides the higher net income in each year? Credit Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Splish Company began operations in 2019 and determined its ending inventory at cost and at lower-of-LIFO cost-or-market at
December 31, 2019, and December 31, 2020. This information is presented below:
12/31/19 $378,170
435,650
12/31/20
Cost
12/31/19
(a) Prepare the journal entries required at December 31, 2019, and December 31, 2020, assuming that the inventory is recorded at
market, and a perpetual inventory system (cost-of-goods-sold method) is used. (Credit account titles are automatically indented when
amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.)
12/31/20
Lower-of-Cost-or-Market
Date Account Titles and Explanation
$358,260
419,900
12/31/20
Date Account Titles and Explanation
12/31/19
(b) Prepare journal entries required at December 31, 2019, and December 31, 2020, assuming that the inventory is recorded at
market under a perpetual system (loss method is used). (Credit account titles are automatically indented when amount is entered. Do not
indent manually. If no entry is required, select "No entry for the account titles and enter O for the amounts.)
Debit
(c) Which of the two methods above provides the higher net income in each year?
Credit
Debit
Credit
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