* Your answer is incorrect. Sheridan Inc. has selected specific identification as its inventory costing method. At December 31, 2025, it has the following information for its finished goods: Replacement value $5980 Cost $3680 Expected selling price $5520 Normal profit margin 10% Selling costs 20% of expected selling price At what amount should Sheridan value its inventory at December 31, 2025? $5980 • $4416 $3864 $3680

* Your answer is incorrect. Sheridan Inc. has selected specific identification as its inventory costing method. At December 31, 2025, it has the following information for its finished goods: Replacement value $5980 Cost $3680 Expected selling price $5520 Normal profit margin 10% Selling costs 20% of expected selling price At what amount should Sheridan value its inventory at December 31, 2025? $5980 • $4416 $3864 $3680

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter6: Cost Of Goods Sold And Inventory

Section: Chapter Questions

Problem 37BE: Lower of Cost or Market Garcia Company uses FIFO, and its inventory at the end of the year was...

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Moore Company uses the LIFO cost flow assumption and carries Product A in inventory on December 31, 2019, at its unit cost of 9.50. Because of a sharp decline in demand for the product, the selling price was reduced to 10.00 per unit. Moores normal profit margin on Product A is 2.00, disposal costs are 1.00 per unit, and the replacement cost is 6.50. Under the lower of cost or market rule, Moores December 31, 2019, inventory of Product A should be valued at a unit cost of: a. 6.50 b. 9.00 c. 7.00 d. 9.50
Black Corporation uses the LIFO cost flow assumption. Each unit of its inventory has a net realizable value of 300, a normal profit margin of 35, and a current replacement cost of 250. Determine the amount per unit that should be used as the market value to apply the lower of cost or market rule to determine Blacks ending inventory.
Lower of Cost or Market Garcia Company uses FIFO, and its inventory at the end of the year was recorded in the accounting records at $17,800. Due to technological changes in the market, Garcia would be able to replace its inventory for $16,500. Required: 1. Using the lower of cost or market method, what amount should Garcia report for inventory on its balance sheet at the end of the year? 2. Prepare the journal entry required to value the inventory at the lower of cost or market.
Konan, Inc. needs to determine its inventory value. The following information pertains to the individual products in ending inventory: Product Cost Replacement Cost Selling Price Cost of Completion Normal Profit L-19 $40 $38 $50 $2 $11 M-23 52 40 60 10 8 N-05 20 24 30 2 6 Assuming Konan uses the FIFO method for costing its inventory, the net realizable value for product L-19 is: Multiple Choice $37. $38. $48. $50 Assuming Konan uses the LIFO method for costing its inventory, the maximum limit for market value of product L-19 is: Multiple Choice $37. $38. $48. $50.
Your answer is incorrect. Sheridan Inc. has selected specific identification as its inventory costing method. At December 31, 2025, it has the following information for its finished goods: Replacement value $5980 Cost $3680 Expected selling price $5520 Normal profit margin 10% Selling costs 20% of expected selling price At what amount should Sheridan value its inventory at December 31, 2025? $5980 • $4416 $3864 $3680
! Required information [The following information applies to the questions displayed below.] Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold. Data for 2024 are as follows: Beginning inventory Purchases Freight-in Purchase returns Net markups Net markdowns Normal spoilage Abnormal spoilage Sales Sales returns Cost $ 89,000 352,000 8,900 6,900 4,512 Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold Retail $ 179,000 579,000 10,900 15,900 The company records sales net of employee discounts. Employee discounts for 2024 totaled $3,900. Conventional application 11,900 2,900 7,900 539,000 9,900 2. Estimate Sparrow's ending inventory and cost of goods sold for the year using the retail inventory method and the conventional application. Note: Round Cost-to-retail percentage to 2 decimal places and final answers to the nearest whole dollar amount.
! Required information [The following information applies to the questions displayed below.] Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold. Data for 2024 are as follows: Beginning inventory Purchases Freight-in Purchase returns. Net markups Net markdowns Normal spoilage Abnormal spoilage Sales Sales returns Cost $85,000 352,000 8,500 6,500 Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold 4,760 Retail $ 175,000 575,000 10,500 15,500 11,500 Average cost application 2,500 7,500 The company records sales net of employee discounts. Employee discounts for 2024 totaled $3,500. 535,000 9,500 Required: 1. Estimate Sparrow's ending inventory and cost of goods sold for the year using the retail inventory method and the average cost application. Note: Round Cost-to-retail percentage to 2 decimal places and final answers to the nearest whole dollar amount.
A firm utilizes a periodic inventory cost system with a Last-In, First-Out (LIFO) cost flow assumption. What does the firm report as the lower of cost or market for the following two items? Item A Item B Costs to have inventory ready for sale $4 $0 Current Cost to Replace $50 $55 Estimated Selling Price $62 $70 Estimated Normal Profit Margin $12 $12 Cost per the accounting record $60 $60 Group of answer choices Item A: $46, Item B: $55 Item A: $46, Item B: $58 Item A: $46, Item B: $60 Item A: $50, Item B: $55 Item A: $50, Item B: $58
Ivanhoe Inc. has the following information related to an item in its ending inventory. Packit (Product # 874) has a cost of $93, a replacement cost of $81, a net realizable value of $87, and a normal profit margin of $5. What is the final lower-of-cost-or-market inventory value for Packit? $82. $87. $93. $81.
[The following information applies to the questions displayed below.] Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold. Data for 2024 are as follows: Beginning inventory Purchases Freight-in Purchase returns Net markups Net markdowns Normal spoilage Abnormal spoilage Sales Sales returns Cost $ 92,000 Retail $ 182,000 360,000 582,000 9,200 7,200 11,200 16,200 12,200 3,200 4,840 8,200 542,000 10,200 The company records sales net of employee discounts. Employee discounts for 2024 totaled $4,200. 2. Estimate Sparrow's ending inventory and cost of goods sold for the year using the retail inventory method and the conventional application. Note: Round Cost-to-retail percentage to 2 decimal places and final answers to the nearest whole dollar amount. Answer is complete but not entirely correct. Conventional application Estimated ending inventory at retail $ 123,630 × Estimated ending inventory at cost $ 449,160 x Estimated cost of goods sold…
1 Cullumber Company uses a periodic inventory system and the average cost method. At December 31, 2025, the following information has been compiled for its finished goods inventory: Replacement value Cost Expected selling price Normal profit margin Selling costs $13100 $14500 $15100 15% 5% of expected selling price After applying LCNRV. Cullumber, which uses the cost of goods sold method to record inventory write-downs, will make an entry Odebiting Cost of Goods Sold for $155. O crediting Cost of Goods Sold for $1400. O debiting Inventory Loss for $600. Ⓒcrediting Inventory for $600.
A. Based on the fundamental principle of IAS2, identify two (2) circumstances where the NRV of inventory might be lower than its cost? B. Storm Inc. had 500 units of Product X at 30 June 2020 in inventory. The product had been purchased at list price of $18 per unit and normally sells for $24 per unit. Additional information relating to the units in inventory: VAT – 10%; wharehousing cost - $0.55 per unit; purchase discount - $0.40 per unit; carriage inwards - $0.60 per unit. Recently , Product X started to deteriorate but can still be sold for $24 per unit, provided that some rectification/re-packaging work is undertaken at a cost of $3 per unit. Required: At what amount would Product X be required to be stated on 30 June 2020? Provide detailed analysis to support your answer