Chapter 6, Problem 6.5AP

Calculate ending inventory end cost of goods sold using FIFO and LIFO and adjust inventory using lower of cost and net realizable value (LO6–3, 6–6)

For the current year, Parker Games has the following inventory transactions related to its traditional board games.

 Because of the increasing popularity of electronic video games, Parker Games continues to see a decline in the demand for board games. Sales prices have decreased by over 50% during the year. At the end of the war, Parker estimates the net realizable value of the 100 units of unsold inventory to be $500.

Required:

  1.    Using FIFO, calculate ending inventory and cost of goods sold.

  2.    Using LIFO, calculate ending inventory and cost of goods sold.

  3.    Determine the amount of ending inventory to report using lower of cost and net realizable value under FIFO. Record any necessary adjustment.