This problem consists of TWO parts Part One: Galaxy Corporation has a beginning inventory in 2023 of $1,400,000 and an ending inventory of $1,694,000. The price level has increased from 100 at the beginning of 2023 to 110 at the end of 2023. Calculate the ending inventory value using the dollar value LIFO method. Part Two: At the end of 2024, Galaxy's inventory is $1,886,000 in terms of a price level of 115 which exists at the end of 2024. Calculate the inventory value at the end of 2024 using the dollar value LIFO method. Problem Five (4 points) Maxwell Corporation provides you with the following inventory related to its inventory at December 31, 2023: Inventory Original Cost Replacement Net Realizable Net Realizable Appropriate Item per Unit Cost Value Value Less Inventory Value A $.65 $.45 B.45.40 Normal Profit at 12/31/23 C.70.75 D.75.65 E.90.85 The normal selling price is $1.00 per unit for All items. Disposal costs amount to 10% of the selling price and a normal profit is 30% of selling price. There are 1,500 units of EACH item in the 12/31/23 inventory. Required: 1. Complete the last three columns in the schedule above using the lower of cost or market rules. 2. Prepare the necessary adjusting entry at 12/31/23 to record inventory at lower of cost or market. All items are aggregated.
This problem consists of TWO parts Part One: Galaxy Corporation has a beginning inventory in 2023 of $1,400,000 and an ending inventory of $1,694,000. The price level has increased from 100 at the beginning of 2023 to 110 at the end of 2023. Calculate the ending inventory value using the dollar value LIFO method. Part Two: At the end of 2024, Galaxy's inventory is $1,886,000 in terms of a price level of 115 which exists at the end of 2024. Calculate the inventory value at the end of 2024 using the dollar value LIFO method. Problem Five (4 points) Maxwell Corporation provides you with the following inventory related to its inventory at December 31, 2023: Inventory Original Cost Replacement Net Realizable Net Realizable Appropriate Item per Unit Cost Value Value Less Inventory Value A $.65 $.45 B.45.40 Normal Profit at 12/31/23 C.70.75 D.75.65 E.90.85 The normal selling price is $1.00 per unit for All items. Disposal costs amount to 10% of the selling price and a normal profit is 30% of selling price. There are 1,500 units of EACH item in the 12/31/23 inventory. Required: 1. Complete the last three columns in the schedule above using the lower of cost or market rules. 2. Prepare the necessary adjusting entry at 12/31/23 to record inventory at lower of cost or market. All items are aggregated.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:This problem consists of TWO parts
Part One: Galaxy Corporation has a beginning inventory in 2023 of $1,400,000 and an ending inventory of $1,694,000.
The price level has increased from 100 at the beginning of 2023 to 110 at the end of 2023. Calculate the ending inventory
value using the dollar value LIFO method.
Part Two: At the end of 2024, Galaxy's inventory is $1,886,000 in terms of a price level of 115 which exists at the end of
2024. Calculate the inventory value at the end of 2024 using the dollar value LIFO method.
Problem Five (4 points)
Maxwell Corporation provides you with the following inventory related to its inventory at December 31, 2023:
Inventory Original Cost Replacement Net Realizable Net Realizable Appropriate
Item per Unit Cost Value Value Less Inventory Value
A $.65 $.45
B.45.40
Normal Profit at 12/31/23
C.70.75
D.75.65
E.90.85
The normal selling price is $1.00 per unit for All items. Disposal costs amount to 10% of the selling price and a normal
profit is 30% of selling price. There are 1,500 units of EACH item in the 12/31/23 inventory.
Required:
1. Complete the last three columns in the schedule above using the lower of cost or market rules.
2. Prepare the necessary adjusting entry at 12/31/23 to record inventory at lower of cost or market. All items are
aggregated.
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