15th Edition

ISBN: 9781337587488

Author: WARREN

Publisher: CENGAGE L

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Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in…

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Textbook Question

Chapter 7, Problem 6PB

Data on the physical inventory of Katus Products Co. as of December 31 follow:

Chapter 7, Problem 6PB, Data on the physical inventory of Katus Products Co. as of December 31 follow: Quantity and cost , example 1

Quantity and cost data from the last purchases invoice of the year and the next-to-the-last purchases invoice are summarized as follows:

Chapter 7, Problem 6PB, Data on the physical inventory of Katus Products Co. as of December 31 follow: Quantity and cost , example 2

Instructions

Determine the inventory at cost as well as at the lower of cost or market, using the first-in, first-out method. Record the appropriate unit costs on the inventory sheet and complete the pricing of the inventory. When there are two different unit costs applicable to an item:

1. Draw a line through the quantity and insert the quantity and unit cost of the last purchase.
2. On the following line, insert the quantity and unit cost of the next-to-the-last purchase.
3. Total the cost and market columns and insert the lower of the two totals in the LCM column. The first item on the inventory sheet has been completed as an example.

Chapter 7, Problem 6PB, Data on the physical inventory of Katus Products Co. as of December 31 follow: Quantity and cost , example 3

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Chapter 7, Problem 5PB

Chapter 7, Problem 7PB

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Chapter 7 Solutions

FINAN.ACCOUNTING-W/DGT ACCESS (LOOSE)

Ch. 7 - Prob. 1DQ Ch. 7 - Why is it important to take a physical inventory...Ch. 7 - Do the terms FIFO, LIFO, and weighted average...Ch. 7 - If merchandise inventory is being valued at cost...Ch. 7 - Which of the three methods of inventory...Ch. 7 - If inventory is being valued at cost and the price...Ch. 7 - Using the following data, how should the...Ch. 7 - The inventory at the end of the year was...Ch. 7 - Hutch Co. sold merchandise to Bibbins Company on...Ch. 7 - A manufacturer shipped merchandise to a retailer...

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Solution Summary: The author explains the value of inventory using the first in first out method under lower-of-cost-or-market inventory.

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