(a) Introduction: The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined. To find: The amount of the inventory using lower cost or market applied on an item-by-item basis.

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Answer 1

Question

Chapter 6, Problem 69BPSB

To determine

(a)

Introduction:

The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.

To find:

The amount of the inventory using lower cost or market applied on an item-by-item basis.

To determine

(b)

Introduction:

The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.

To prepare:

The journal entry to value inventory at lower of cost or market.

To determine

(c)

Introduction:

The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.

To state:

The impact of lower cost or market rule on financial statements and the impact of financial statement of a subsequent period in which inventory is sold.

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The following VAT balances were extracted from the subsidiary journals of Africa Traders as at 28 February 2024. R Cash receipts journal VAT input 556,50 VAT output 14 676,48 Cash payments journal VAT input 9 375,12 VAT output 642,78 Purchases journal VAT 6 260,40 Sales journal VAT 8 037,12 Purchases returns journal VAT 871,75 Sales returns journal VAT 902,32 On 1 February 2024, the VAT input account had a debit opening balance of R14 768 and the VAT output account had a credit opening balance of R14 154. Calculate the closing balance of the VAT output account as at 28 February 2024

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Answer 2

Question

Chapter 6, Problem 69BPSB

To determine

(a)

Introduction:

The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.

To find:

The amount of the inventory using lower cost or market applied on an item-by-item basis.

To determine

(b)

Introduction:

The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.

To prepare:

The journal entry to value inventory at lower of cost or market.

To determine

(c)

Introduction:

The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.

To state:

The impact of lower cost or market rule on financial statements and the impact of financial statement of a subsequent period in which inventory is sold.

Expert Solution & Answer

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Answer 3

Question

Chapter 6, Problem 69BPSB

To determine

(a)

Introduction:

The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.

To find:

The amount of the inventory using lower cost or market applied on an item-by-item basis.

To determine

(b)

Introduction:

The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.

To prepare:

The journal entry to value inventory at lower of cost or market.

To determine

(c)

Introduction:

The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.

To state:

The impact of lower cost or market rule on financial statements and the impact of financial statement of a subsequent period in which inventory is sold.

Expert Solution & Answer

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Answer 4

Question

Chapter 6, Problem 69BPSB

To determine

(a)

Introduction:

The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.

To find:

The amount of the inventory using lower cost or market applied on an item-by-item basis.

To determine

(b)

Introduction:

The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.

To prepare:

The journal entry to value inventory at lower of cost or market.

To determine

(c)

Introduction:

The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.

To state:

The impact of lower cost or market rule on financial statements and the impact of financial statement of a subsequent period in which inventory is sold.

Expert Solution & Answer

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Answer 5

Chapter 6, Problem 69BPSB

To determine

(a)

Introduction:

The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.

To find:

The amount of the inventory using lower cost or market applied on an item-by-item basis.

To determine

(b)

Introduction:

The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.

To prepare:

The journal entry to value inventory at lower of cost or market.

To determine

(c)

Introduction:

The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.

To state:

The impact of lower cost or market rule on financial statements and the impact of financial statement of a subsequent period in which inventory is sold.

Answer 6

Chapter 6, Problem 69BPSB

To determine

(a)

Introduction:

The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.

To find:

The amount of the inventory using lower cost or market applied on an item-by-item basis.

Answer 7

Chapter 6, Problem 69BPSB

To determine

(a)

Introduction:

The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.

To find:

The amount of the inventory using lower cost or market applied on an item-by-item basis.

Answer 8

To determine

(b)

Introduction:

The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.

To prepare:

The journal entry to value inventory at lower of cost or market.

Answer 9

To determine

(b)

Introduction:

The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.

To prepare:

The journal entry to value inventory at lower of cost or market.

Answer 10

To determine

(c)

Introduction:

The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.

To state:

The impact of lower cost or market rule on financial statements and the impact of financial statement of a subsequent period in which inventory is sold.

Answer 11

To determine

(c)

Introduction:

The lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework. The method states that the cost of inventory must be taken as the original cost or its current market price whichever cost is less as the inventory might have become obsolete, damaged or its value might have declined.

To state:

The impact of lower cost or market rule on financial statements and the impact of financial statement of a subsequent period in which inventory is sold.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 6 - Prob. 1DQ Ch. 6 - Describe the types of inventories used by...Ch. 6 - Compare the flow of inventory costs between...Ch. 6 - What are the components of cost of goods available...Ch. 6 - How is cost of goods sold determined?Ch. 6 - How do the perpetual and periodic inventory...Ch. 6 - Why are perpetual inventory systems more expensive...Ch. 6 - Prob. 8DQ Ch. 6 - Prob. 9DQ Ch. 6 - Prob. 10DQ

Solution Summary: The author explains that the lower of cost or market rule follows the historical cost method as per Generally Accepted Accounting Principles accounting framework.

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