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Accounting principles for inventory and applying the lower-of-cost-or-market rule
Learning Objective 1, 4
Some of L and K Electronics’s merchandise is gathering dust. It is now December 31, 2018, and the current replacement cost of the ending merchandise inventory is 332,000 below the business’s cost of the goods, which was $98,000. Before any adjustments at the end of the period, the company’s Cost of Goods Sold account has a balance of $410,000.
Requirements
1. Journalize any required entries.
2. At what amount should the company report merchandise inventory on the
3. At what amount should the company report cost of goods sold on the income statement?
4. Which accounting principle or concept is most relevant to this situation?
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Chapter 6 Solutions
Horngren's Accounting (11th Edition)
- What is the correct answer general Accountingarrow_forwardDepartment A had 15,000 units in work in process that were 60% completed as to labor and overhead at the beginning of the period; 45,600 units of direct materials were added during the period; 42,500 units were completed during the period, and 11,000 units were 80% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The first-in, first-out method is used to cost inventories. The number of equivalent units of production for conversion costs for the period was ____ Units.arrow_forwardansarrow_forward