Windsor Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is available fromthe company's inventory records as of December 31, 2025.ReplacementItemQuantityUnit CostCost/UnitEstimated SellingPrice/UnitCompletion & DisposalCost/UnitNormal ProfitMargin/UnitA1,400$8.85$9.91$12.39$1.77$2.12B1,1009.689.3211.091.061.42C1,3006.616.378.501.360.71D1,3004.484.967.430.941.771,7007.557.437.910.831.18Greg Forda is an accounting clerk in the accounting department of Windsor Co., and he cannot understand why the market valuekeeps changing from replacement cost to net realizable value to something that he cannot even figure out. Greg is very confused, andhe is the one who records inventory purchases and calculates ending inventory. You are the manager of the department and anaccountant.

Greg's confusion is understandable. Here's how to explain the concept of "lower-of-cost-or-market"…

Answered: Windsor Co. follows the practice of…

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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S At the end of the year, Randy's Parts Company had the following items in inventory: Item P1 Quantity 60 P2 40 P3 80 P4 70 Required Unit Cost Unit Market Value $ 85 70 130 125 $ 90 72 a. Determine the amount of ending inventory using the lower-of-cost-or-market rule applied to each individual inventory item. b. Provide the adjustment necessary to write down the inventory based on Requirement a. Assume that Randy's Parts Co. uses the perpetual inventory system. c. Determine the amount of ending inventory, assuming that the lower-of-cost-or-market rule is applied to the total inventory in aggregate. 120 130 d. Provide the adjustment necessary to write down the inventory based on Requirement c. Assume that Randy's Parts Co. uses the perpetual inventory system. Required A Required B Required C Ending inventory Complete this question by entering your answers in the tabs below. Required D Determine the amount of ending inventory using the lower-of-cost-or-market rule applied to each…
Crane Ltd. had the following items in inventory as at December 31, 2024: Item No. Quantity Unit Cost NRV དྷྭ སྒྲ སཱུ སྦ 340 $4.00 $4.30 370 3.00 2.90 380 8.00 9.00 400 7.00 6.80 Assume that Crane uses a perpetual inventory system. Fill in the table below for the lower of cost and net realizable value per unit, the inventory dollar amount at the lower of cost and net realizable value, and the dollar amount of the inventory at cost. ntity Unit Cost NRV Unit LC & NRV 340 $4.00 $4.30 S 370 3.00 2.90 Dollar LC & NRV 4.00 $ 2.90 1360 1073 380 8.00 9.00 8.00 3040 400 7.00 6.80 6.80 2720 Dollar Cost 1360 1110 3040 2800 $ 8193 $ 8310 Prepare any necessary adjusting entry at December 31, 2024. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry) Account Titles Debit Credit
UMET's Stores had the following inventory transactions in 2020: Transaction Units Cost per unit 1/1 Balance 50 $6 2/14 Sale 25 5/23 Purchase 100 8 8/21 Sale 50 11/5 Purchase 25 12 11/18 Sale 95 Required: Compute tge cost of goods sold and the ending inventory using the periodic inventory system for each of the following cost flow assumptions: a. FIFO b. LIFO c. Weighted average
Valuing Inventory at Lower-of-Cost-or-Market Management of Tarry Company takes the position that under the lower-of-cost-or-market rule, the two items below are reported in ending inventory at $119,520 (total). Inventory cost is reported using LIFO. • Edgers: 2,160 in inventory; cost is $22 each; replacement cost is $16 each; estimated sale price is $30 each; estimated distribution cost is $3 each; and normal profit is 10% of sale price. • Hedge clippers: 1,440 in inventory; cost is $50 each; replacement cost is $36 each; estimated sale price is $90 each; estimated distribution cost is $28 each; and normal profit is 20% of sale price. a. Compute your inventory valuation by item and in total for the Tarry Company inventory reported above. Inventory valuation for edgers $ Inventory valuation for hedge clippers Total inventory valuation b. Prepare the entry, if any, to report inventory at the lower-of-cost-or-market. Assume that all adjustments directly impact cost of goods sold and…
Refer to the photo
Jenks Company developed the following information about its inventories in applying the lower-of-cost-or-net-realizabl e-value(LCNRV) basis in valuing inventories: Product Cost NRV A $114,000 $120,000 B 80,000 76,000 C 160,000 162,000 After Jenks applies the LCNRV rule, the value of the inventory reported on the balance sheet would be
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Hh1. just Item E and Item G
HOMETOWN CHA-CHA DABARKADS employs the lower of cost of net realizable value in the measurement of inventory. On December 31, 2020, the ending inventory was reported as follows: Inventory (20,000 @ P21) P420,000 Less: Allowance for inventory writedown 60,000 Net Realizable Value P360,000 Sales and purchases for 2021 are as follows: Purchases Sales Quarter Units UnitCost TotalCost Units UnitPrice TotalPrice 1st 30,000 P18 P540,000 15,000 P19 P285,000 2nd 25,000 20 500,000 30,000 23 690,000 3rd 22,000 21 462,000 25,000 25 625,000 4th 35,000 19 665,000 20,000 24 480,000 The company uses weighted average method in determining inventory cost. On December 31, 2021. The net realizable value per unit is P19. REQUIRED 1. Compute the cost of inventory on December 31, 2021. Note: Round off the weighted average unit cost to two decimal places. 2. Compute the gain/(loss) on inventory writedown. Note: If the amount is a loss, place a hyphen (-) before the figure e.g. -1,234 3. Compute the cost of…
Valuing Inventory at Lower of Cost or Market Management of Tarry Company reports the following inventory using LIFO and applies the lower of cost or market rule. ■ Edgers: 1,680 units in inventory; cost is $22 each; replacement cost is $16 each; estimated sale price is $30 each; estimated distribution cost is $3 each; and normal profit is 10% of sale price. ■Clippers: 1,120 units in inventory; cost is $50 each; replacement cost is $36 each; estimated sale price is $90 each; estimated distribution cost is $28 each; and normal profit is 20% of sale price. Required a. Determine the inventory cost to report on the balance sheet assuming that the company applies the lower of cost or market rule to each inventory item. b. Prepare the journal entry to apply the lower of cost or market rule to inventory assuming that the company adjusts inventory directly and adjusts equity through cost of goods sold. a. Inventory valuation for edgers $ Inventory valuation for clippers Total inventory…

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