Douglas Company's beginning inventory and purchases during the fiscal year ended December 31, 20--, were as shown. Units Unit Price Total Cost January 1, 20- Beginning inventory 1,120 $ 8.20 $ 9,184 March 5 1st purchase 880 9.20 8,096 April 16 2nd purchase 400 9.70 3,880 June 3 3rd purchase 700 10.40 7,280 August 18 4th purchase 600 11.10 6,660 September 13 Sth purchase 780 12.10 9,438 November 14 6th purchase 400 14.20 5,680 December 3 7th purchase 520 14.25 7,410 5,400 $ 57,628 There are 1,000 units of inventory on hand on December 31. Required: 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 Cost of Ending Sold Inventory a. FIFO 13,000 10,672 b. LIFO c. Weighted-average (round calculations to two decimal places) 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". Description Debit Credit
Douglas Company's beginning inventory and purchases during the fiscal year ended December 31, 20--, were as shown. Units Unit Price Total Cost January 1, 20- Beginning inventory 1,120 $ 8.20 $ 9,184 March 5 1st purchase 880 9.20 8,096 April 16 2nd purchase 400 9.70 3,880 June 3 3rd purchase 700 10.40 7,280 August 18 4th purchase 600 11.10 6,660 September 13 Sth purchase 780 12.10 9,438 November 14 6th purchase 400 14.20 5,680 December 3 7th purchase 520 14.25 7,410 5,400 $ 57,628 There are 1,000 units of inventory on hand on December 31. Required: 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 Cost of Ending Sold Inventory a. FIFO 13,000 10,672 b. LIFO c. Weighted-average (round calculations to two decimal places) 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". Description Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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 shown.
Units Unit Price Total Cost
January 1, 20-- Beginning inventory 1,120 $ 8.20 $ 9,184
March 5
1st purchase
880
9.20
8,096
April 16
2nd purchase
400
9.70
3,880
June 3
3rd purchase
700
10.40
7,280
August 18
4th purchase
600
11.10
6,660
September 13 Sth purchase
780
12.10
9,438
November 14 6th purchase
400
14.20
5,680
December 3
7th purchase
520
14.25
7,410
$ 57,628
5,400
There are 1,000 units of inventory on hand on December 31.
Required:
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 Cost of Ending
Sold
Inventory
a. FIFO
13,000
$ 10,672
b. LIFO
c. Weighted-average (round calculations to two
decimal places)
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".
Description
Debit
Credit
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