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York Co. sells one product, which it purchases from various suppliers. York's trial balance at December 31, 2021, included the following accounts: Sales (33,000 units @ $16) S 528,000 Sales discounts 7,500

York Co. sells one product, which it purchases from various suppliers. York's trial balance at December 31, 2021, included the following accounts: Sales (33,000 units @ $16) S 528,000 Sales discounts 7,500

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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Can you please give me  a good explanation of requirement number 2 which is determine whether inventory should be reported at cost or net realizable  value...

I would like to have a better undertanding of that.....

Thank you

York Co. sells one product, which it purchases from various suppliers. York's trial balance at December 31, 2021, included the following accounts: Sales (33,000 units @ $16) $ 528,000 Sales discounts 7,500 Purchases 380,600 Purchase discounts 18,000 Freight-in 5,000 Freight-out 11,000 York Co.'s inventory purchases during 2021 were as follows: Total Units Cost per Unit Cost Beginning inventory 7,000 7.70 $ 53,900 Purchases, quarter ended March 31 13,000 7.50 97,500 Purchases, quarter ended June 30 15,000 7.90 118,500 Purchases, quarter ended September 30 12,000o 8.25 99,000 Purchases, quarter ended December 31 8,000 8.20 65,600 55,000 $ 434,500 Additional Information: a. York's accounting policy is to report inventory in its financial statements at the lower of cost or net realizable value, applied to total inventory. Cost is determined under the first-in, first-out (FIFO) method. b. York has determined that, at December 31, 2021, the net realizable value was $8.00 per unit. Required: la. Prepare York's schedule of cost of goods sold. York includes inventory write-down losses in cost of goods sold. 1b. Prepare York's schedule of ending inventory. 2. Determine whether inventory should be reported at cost or net realizable value.
Transcribed Image Text:York Co. sells one product, which it purchases from various suppliers. York's trial balance at December 31, 2021, included the following accounts: Sales (33,000 units @ $16) $ 528,000 Sales discounts 7,500 Purchases 380,600 Purchase discounts 18,000 Freight-in 5,000 Freight-out 11,000 York Co.'s inventory purchases during 2021 were as follows: Total Units Cost per Unit Cost Beginning inventory 7,000 7.70 $ 53,900 Purchases, quarter ended March 31 13,000 7.50 97,500 Purchases, quarter ended June 30 15,000 7.90 118,500 Purchases, quarter ended September 30 12,000o 8.25 99,000 Purchases, quarter ended December 31 8,000 8.20 65,600 55,000 $ 434,500 Additional Information: a. York's accounting policy is to report inventory in its financial statements at the lower of cost or net realizable value, applied to total inventory. Cost is determined under the first-in, first-out (FIFO) method. b. York has determined that, at December 31, 2021, the net realizable value was $8.00 per unit. Required: la. Prepare York's schedule of cost of goods sold. York includes inventory write-down losses in cost of goods sold. 1b. Prepare York's schedule of ending inventory. 2. Determine whether inventory should be reported at cost or net realizable value.
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