Cost Allocation and Lower-of-Cost-or-Market Douglas Company's beginning inventory and purchases during the fiscal year ended December 31, 20--, were as follows: Units Unit Price Total Cost January 1, 20-- Beginning inventory 1,100 $ 8.00 $ 8,800 March 5 1st purchase 900 9.00 8,100 April 16 2nd purchase 400 9.50 3,800 June 3 3rd purchase 700 10.25 7,175 August 18 4th purchase 600 11.00 6,600 September 13 5th purchase 800 12.00 9,600 November 14 6th purchase 400 14.00 5,600 December 3 7th purchase 500 14.05 7,025 5,400 $ 56,700 There are 1,000 units of inventory on hand on December 31. Required: For the weighted-average method, round calculations to two decimal places. Round all final answers to the nearest dollar. 1. Calculate the total amount to be assigned to the ending inventory and cost of goods sold on December 31 under each of the following methods: Cost of Goods Sold Cost of Ending Inventory a. FIFO $ $ b. LIFO $ $ c. Weighted-average $ $ 2. Assume that the market price per unit (cost to replace) of Douglas's inventory on December 31 was $13. Calculate the total amount to be assigned to the ending inventory on December 31 under each of the following methods: a. FIFO lower-of-cost-or-market $ b. Weighted-average lower-of-cost-or-market $ 3. Prepare required entries to apply: a. FIFO lower-of-cost-or-market b. Weighted-average lower-of-cost-or-market If no entry is required, select "No entry required" and leave the amount boxes blank or enter "0". Description Debit Credit a. b.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Cost Allocation and Lower-of-Cost-or-Market

Douglas Company's beginning inventory and purchases during the fiscal year ended December 31, 20--, were as follows:

		Units	Unit Price	Total Cost
January 1, 20--	Beginning inventory	1,100	$	8.00	$	8,800
March 5	1st purchase	900		9.00		8,100
April 16	2nd purchase	400		9.50		3,800
June 3	3rd purchase	700		10.25		7,175
August 18	4th purchase	600		11.00		6,600
September 13	5th purchase	800		12.00		9,600
November 14	6th purchase	400		14.00		5,600
December 3	7th purchase	500		14.05		7,025
		5,400			$	56,700

There are 1,000 units of inventory on hand on December 31.

Required:

For the weighted-average method, round calculations to two decimal places. Round all final answers to the nearest dollar.

1. Calculate the total amount to be assigned to the ending inventory and cost of goods sold on December 31 under each of the following methods:

	Cost of Goods Sold	Cost of Ending Inventory
a. FIFO	$	$
b. LIFO	$	$
c. Weighted-average	$	$

2. Assume that the market price per unit (cost to replace) of Douglas's inventory on December 31 was $13. Calculate the total amount to be assigned to the ending inventory on December 31 under each of the following methods:

a. FIFO lower-of-cost-or-market	$
b. Weighted-average lower-of-cost-or-market	$

3. Prepare required entries to apply:

a. FIFO lower-of-cost-or-market
b. Weighted-average lower-of-cost-or-market

If no entry is required, select "No entry required" and leave the amount boxes blank or enter "0".

	Description	Debit	Credit
a.

b.

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