Horngren's Accounting (12th Edition)
12th Edition
ISBN: 9780134486444
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 6, Problem E6.22E
Applying the lower-of-cost-or-market rule to inventories
Learning Objective 4
2 GP $66,500
Nutriset Foods reports merchandise inventory at the lower-of-cost-or-market. Prior to releasing its financial statements for the year ended March 31, 2019, Nutriset’s Preliminary income
statement, before the year-end adjustments, appears as follows:
| NUTRISET FOODS | |
| Income Statement (partial) year Ended March 31, 2019 |
|
| Net Sales Revenue | $118,000 |
| Cost of Goods Sold | 47,000 |
| Gross Profit | $71,000 |
Nutriset has determined that the current replacement cost of ending merchandise inventory is $19,500. Cost is $24,000.
Requirements
- Journalize the
adjusting entry for merchandise inventory, if any is required. - Prepare a revised partial income statement to show how Nutriset Foods should report sales, cost of goods sold, and gross profit.
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156 crates @ $ 64 each
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150 crates @ $ 116 each
Requirements
1 Prepare a perpetual inventory record, using the FIFO inventory costing method,
and determine the company's cost of goods sold, ending merchandise inventory,
and gross profit.
2. Prepare a perpetual inventory record, using the LIFO inventory costing method,
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3. Prepare a perpetual inventory record,…
First semester 2020
Q1: ABC company had the following purchases and sales information:
Purchases
Sales
10 units at $110
January
February
20 units at $115
May
11 units
November
10 units at $150
Using the FIFO inventory costing method, what is the cost of the ending inventory on
30 November?
A. $3,400
B. $3,685
C. 2,185
D. $1,215
Applying the Cost of Goods Sold Model
The following amounts were obtained from Stanwick Company's accounting records.
2019
2020
Net sales
$388,600
$427,460
Cost of goods sold:
Beginning inventory
$36,800
(d)
Purchases
(a)
296,700
Goods available for sale
(b)
(e)
Ending inventory
42,740
(f)
Cost of goods sold
(c)
296,070
Gross margin
$123,040
(g)
Instructions:
Compute the missing amounts. Input your answers as positive numbers.
2019
2020
Net sales
$388,600
$427,460
Cost of goods sold:
Beginning inventory
$36,800
$fill in the blank 1
Purchases
fill in the blank 2
296,700
Goods available for sale
fill in the blank 3
fill in the blank 4
Ending inventory
42,740
fill in the blank 5
Cost of goods sold
fill in the blank 6
296,070
Gross margin
$123,040
$fill in the blank 7
Chapter 6 Solutions
Horngren's Accounting (12th Edition)
Ch. 6 - Which principle or concept states that business...Ch. 6 - Which inventory costing method assigns to ending...Ch. 6 - Assume Nile.com began April with 14 units of...Ch. 6 - Suppose Nile.com used the weighted-average...Ch. 6 - Which inventory costing method results in the...Ch. 6 - Which of the following is most closely linked to...Ch. 6 - At December 31, 2018, Stevenson Company overstated...Ch. 6 - Suppose Maestro’s had cost of goods sold during...Ch. 6 - Suppose used the LIFO inventory costing method and...Ch. 6 - Prob. 1RQ
Ch. 6 - Prob. 2RQCh. 6 - Prob. 3RQCh. 6 - Prob. 4RQCh. 6 - Discuss some measures that should be taken to...Ch. 6 - Under a perpetual inventory system, what are the...Ch. 6 - When using a perpetual inventory system and the...Ch. 6 - During periods of rising costs, which inventory...Ch. 6 - What does the lower-of-cost-or market (LCM) rule...Ch. 6 - What account is debited when recording the...Ch. 6 - What is the effect on cost of goods sold, gross...Ch. 6 - When does an inventory error cancel out, and why?Ch. 6 - How is inventory turnover calculated, and what it...Ch. 6 - How is days’ sales inventory calculated, and what...Ch. 6 - When using the periodic inventory system, which...Ch. 6 - When using periodic inventory system and...Ch. 6 - Determining inventory accounting principles...Ch. 6 - Determining inventory costing methods Learning...Ch. 6 - Preparing a perpetual Inventory record and journal...Ch. 6 - Preparing a perpetual inventor, record and journal...Ch. 6 - Preparing a perpetual inventor record and journal...Ch. 6 - Preparing a perpetual inventory record and journal...Ch. 6 - Comparing Cost of Goods Sold under FIFO, LIFO, and...Ch. 6 - Applying the lower-of-cost-or-market rule Learning...Ch. 6 - Determining the effect of an inventory error...Ch. 6 - Computing the rate of inventory turnover and days’...Ch. 6 - Computing periodic inventory amounts—FIFO Learning...Ch. 6 - Computing periodic inventory amounts—LIFO Learning...Ch. 6 - Computing periodic inventory...Ch. 6 - Using accounting vocabulary Learning Objective 1,...Ch. 6 - Comparing inventory methods Learning Objective 2...Ch. 6 - Measuring and journalizing merchandise inventory...Ch. 6 - Measuring and journalizing merchandise inventory...Ch. 6 - Measuring ending inventory and cost of goods sold...Ch. 6 - Comparing amounts for cost of goods sold, ending...Ch. 6 - Comparing cost of goods sold and gross...Ch. 6 - Applying the lower-of-cost-or-market rule to...Ch. 6 - Applying the lower-of-cost-or-market rule to...Ch. 6 - Measuring the effect of an inventory error...Ch. 6 - Correcting an inventory error-two years Learning...Ch. 6 - Computing inventory turnover and days’ sales in...Ch. 6 - Comparing ending merchandise inventory, cost of...Ch. 6 - Computing periodic inventory amounts Learning...Ch. 6 - Accounting for inventory using the perpetual...Ch. 6 - Accounting for inventory using the perpetual...Ch. 6 - Accounting principles for inventory and applying...Ch. 6 - Prob. P6.31APGACh. 6 - Prob. P6A.32APGACh. 6 - Prob. P6.33BPGBCh. 6 - Prob. P6.34BPGBCh. 6 - Accounting principles for inventory and applying...Ch. 6 - Prob. P6.36BPGBCh. 6 - Prob. P6A.37BPGBCh. 6 - Prob. P6.38CTCh. 6 - Prob. P6.39CPCh. 6 - Prob. P6.40PSCh. 6 - Prob. 1CPCh. 6 - Prob. 2CPCh. 6 - Prob. 3CPCh. 6 - Prob. 4CPCh. 6 - Prob. 5CPCh. 6 - Prob. 6CPCh. 6 - Prob. 7CPCh. 6 - Prob. 8CPCh. 6 - Prob. 9CPCh. 6 - Prob. 10CPCh. 6 - Prob. 11CPCh. 6 - Prob. 6.1TIATCCh. 6 - Prob. 6.1DCCh. 6 - Prob. 6.1FSC
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