Inventory carrying value with the lower-of-cost-or-market (LCM) rule using individual item basis. Given Information: Selling price of four foot furniture is $120, Six foot furniture is $160 and Eight foot furniture is $200. FIFO cost of four foot furniture is $84, six foot furniture is $94 and eight foot furniture is $150. Current replacement cost of four foot furniture is $72, six foot furniture is $88 and eight foot furniture is $125. Disposal cost of four foot furniture is $18, six foot furniture is $25 and eight foot furniture is $20. Normal profit on four foot furniture is 20%, on six foot furniture is 25% and on eight foot furniture is 30%. Units in ending inventory in four foot furniture are 1,000 units; in six foot furniture is 2,100 units and in eight foot furniture is 900 units.
Inventory carrying value with the lower-of-cost-or-market (LCM) rule using individual item basis. Given Information: Selling price of four foot furniture is $120, Six foot furniture is $160 and Eight foot furniture is $200. FIFO cost of four foot furniture is $84, six foot furniture is $94 and eight foot furniture is $150. Current replacement cost of four foot furniture is $72, six foot furniture is $88 and eight foot furniture is $125. Disposal cost of four foot furniture is $18, six foot furniture is $25 and eight foot furniture is $20. Normal profit on four foot furniture is 20%, on six foot furniture is 25% and on eight foot furniture is 30%. Units in ending inventory in four foot furniture are 1,000 units; in six foot furniture is 2,100 units and in eight foot furniture is 900 units.
Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.
Chapter 10, Problem 10.5P
a.
To determine
Inventory carrying value with the lower-of-cost-or-market (LCM) rule using individual item basis.
Given Information:
Selling price of four foot furniture is $120, Six foot furniture is $160 and Eight foot furniture is $200.
FIFO cost of four foot furniture is $84, six foot furniture is $94 and eight foot furniture is $150.
Current replacement cost of four foot furniture is $72, six foot furniture is $88 and eight foot furniture is $125.
Disposal cost of four foot furniture is $18, six foot furniture is $25 and eight foot furniture is $20.
Normal profit on four foot furniture is 20%, on six foot furniture is 25% and on eight foot furniture is 30%.
Units in ending inventory in four foot furniture are 1,000 units; in six foot furniture is 2,100 units and in eight foot furniture is 900 units.
b.
To determine
To prepare:Journal entry to record written down value using indirect method.
c.
To determine
Carrying value of the inventory with LCM rule using total inventory basis.
d.
To determine
To prepare: Journal entry to record written down LCM using direct method is as follows: