Required 1 Required 2Assuming inventory write-downs are common for Almaden, record any necessary year-end adjustment amount for each of the LCNRVapplications in requirement 1. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journalentry required" in the first account field.)View transaction listJournal entry worksheet<1 2 3Record necessary year-end adjustment for individual products.Note: Enter debits before credits.Transaction1explanationRecord entryGeneral JournalClear entry< Required 1DebitCreditView general journalRequired 2 > Problem 9-2 (Algo) Lower of cost or net realizable value; by product, category, and total Inventory [LO9-1]Almaden Hardware Store sells two product categories, tools and paint products. Information pertaining to its 2021 year-end inventoryis as follows:Inventory,by Product CategoryTools:HammersSawsScrewdriversPaint products:1-gallon cansPaint brushesTools:ProductHammersSawsScrewdriversTotal toolsPaint products:1-gallon cansPaint brushesTotal paintTotalQuantity110140240$440110Required:1. Determine the carrying value of inventory at year-end, assuming the lower of cost or net realizable value (LCNRV) rule is applied to(a) individual products. (b) product categories, and (c) total inventory.2. Assuming inventory write-downs are common for Almaden, record any necessary year-end adjustment amount for each of theLCNRV applications in requirement 1.$$Complete this question by entering your answers in the tabs below.CostRequired 1 Required 2Determine the carrying value of inventory at year-end, assuming the lower of cost or net realizable value (LCNRV) rule isapplied to (a) individual products, (b) product categories, and (c) total inventory.Lower of cost and NRVByProductCategoriesPer UnitCost$4.409.401.405.403.40o $0 $0 $NetRealizableValue$4.908.402.00Net Realizable By IndividualValueProducts04.403.9000 $< Required 10 $0By TotalInventoryRequired 2 >

Solution: As per GAAPs, inventories are valued at year end at cost or net realizable value whichever…

Almaden Hardware Store sells two product categories, tools and paint products. Information pertaining to its 2021 year-end inventory is as follows: Inventory, by Product Category Tools: Hammers Saws Screwdrivers Paint products: 1-gallon cans Paint brushes Quantity Cost 110 140 240 Per Unit 440 110 $4.40 9.40 1.40 5.40 3.40 Net Realizable Value $4.90 8.40 2.00 4.40 3.90 Required: 1. Determine the carrying value of inventory at year-end, assuming the lower of cost or net realizable value (LCNRV) rule is applied to (a) individual products, (b) product categories, and (c) total inventory. 2. Assuming inventory write-downs are common for Almaden, record any necessary year-end adjustment amount for each of the LCNRV applications in requirement 1.

Almaden Hardware Store sells two product categories, tools and paint products. Information pertaining to its 2021 year-end inventory is as follows: Inventory, by Product Category Tools: Hammers Saws Screwdrivers Paint products: 1-gallon cans Paint brushes Quantity Cost 110 140 240 Per Unit 440 110 $4.40 9.40 1.40 5.40 3.40 Net Realizable Value $4.90 8.40 2.00 4.40 3.90 Required: 1. Determine the carrying value of inventory at year-end, assuming the lower of cost or net realizable value (LCNRV) rule is applied to (a) individual products, (b) product categories, and (c) total inventory. 2. Assuming inventory write-downs are common for Almaden, record any necessary year-end adjustment amount for each of the LCNRV applications in requirement 1.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

E8.12 (LO 3) (FIFO, LIFO, Average-Cost Inventory) Shania Twain Company was formed onDecember 1, 2019. The following information is available from Twain’s inventory records for Product BAP. Units Unit CostJanuary 1, 2020 (beginning inventory) 600 $ 8.00Purchases:January 5, 2020 1,200 9.00January 25, 2020 1,300 10.00February 16, 2020 800 11.00March 26, 2020 600 12.00 A physical inventory on March 31, 2020, shows 1,600 units on hand.InstructionsPrepare schedules to compute the ending inventory at March 31, 2020, under each of the following inventory methods.a. FIFO b. LIFO. c. Weighted-average (round unit costs to two decimal places)
E9.3B (L0 1) (LCNRV) Sunshine Company follows the practice of pricing its inventory at LCNRV, on an individual-item basis. Item No. Quantity Cost per Unit Cost to Replace Estimated Selling Price Cost of Completion and Disposal Normal Profi t A 1,200 $8.10 $8.00 $9.00 $0.35 $0.90 B 600 6.00 5.60 6.00 0.45 0.50 C 200 5.50 5.00 7.00 0.40 1.00 D 700 7.25 7.50 8.00 0.50 0.90 E 1,000 2.10 2.00 2.80 0.65 0.20 F 500 4.05 4.00 5.00 0.40 0.75 G 2,000 8.75 8.15 9.00 0.60 0.50 H 300 9.95 9.00 10.50 0.30 1.00 Instructions From the information above, determine the amount of Sunshine Company inventory using the LCNRV method. determine the amount of Sunshine Company inventory using the LCM method.
A. Based on the fundamental principle of IAS2, identify two (2) circumstances where the NRV of inventory might be lower than its cost? B. Storm Inc. had 500 units of Product X at 30 June 2020 in inventory. The product had been purchased at list price of $18 per unit and normally sells for $24 per unit. Additional information relating to the units in inventory: VAT – 10%; wharehousing cost - $0.55 per unit; purchase discount - $0.40 per unit; carriage inwards - $0.60 per unit. Recently , Product X started to deteriorate but can still be sold for $24 per unit, provided that some rectification/re-packaging work is undertaken at a cost of $3 per unit. Required: At what amount would Product X be required to be stated on 30 June 2020? Provide detailed analysis to support your answer
E8.2 (LO 2) (Inventoriable Goods and Costs) In your audit of Jose Oliva Company, you find that a physical inventory on December 31, 2020, showed merchandise with a cost of $441,000 was on hand at that date. You also discover the following items were all excluded from the $441,000. 1. Merchandise of $61,000 which is held by Oliva on consignment. The consignor is the Max Suzuki Company. 2. Merchandise costing $38,000 which was shipped by Oliva f.o.b. destination to a customer on December 31, 2020. The customer was expected to receive the merchandise on January 6, 2021. 3. Merchandise costing $46,000 which was shipped by Oliva f.o.b. shipping point to a customer on December 29, 2020. The customer was scheduled to receive the merchandise on January 2, 2021. 4. Merchandise costing $83,000 shipped by a vendor f.o.b. destination on December 30, 2020, and received by Oliva on January 4, 2021. 5. Merchandise costing $51,000 shipped by a vendor f.o.b. shipping point on December 31,…
SE6-4 Lower of Cost or Market Method: The Claremont Company’s ending inventory is composed of 50 units that had cost $20 each and 100 units that had cost $15 each. If the company can replace all 150 units at a price of $16 each, what value should be assigned to the company’s ending inventory assuming that it applies the Lower-Cost-or-Market-Method? SE6-6 Inventory Turnover and Days’ Sales in Inventory: Glass & Company reported the following information in its recent annual report: 2015 2016 Cost of goods sold $4,000,000 $4,600,000 Beginning Inventory 900,000 860,000 Ending Inventory 860,000 640,000…
P8.6 (LO 3) (Compute FIFO, LIFO, Average-Cost—Periodic and Perpetual) Ehlo Company is a multi product firm. Presented below is information concerning one of its products, the Hawkeye.Date Transaction Quantity Price/Cost1/1 Beginning inventory 1,000 $122/4 Purchase 2,000 182/20 Sale 2,500 304/2 Purchase 3,000 2311/4 Sale 2,200 33Instructions Compute ending inventory AND cost of goods sold, assuming Ehlo uses: a. Periodic system, FIFO cost flow. b. Perpetual system, FIFO cost flow. c. Periodic system, LIFO cost flow. d. Perpetual system, LIFO cost flow. e. Periodic system, weighted-average cost flow. f. Perpetual system,…
Referring to the situation in P9.2 for Garcia Home Improvement Company, consider the following expanded data at May 31, 2020. Assume Garcia uses LIFO inventory costing. Cost ReplacementCost SalesPrice Net RealizableValue NormalProfit Aluminum siding $ 70,000 $ 62,500 $ 64,000 $ 56,000 $ 5,100 Cedar shake siding 86,000 79,400 94,000 84,800 7,400 Louvered glass doors 112,000 124,000 186,400 168,300 18,500 Thermal windows 140,000 126,000 154,800 140,000 15,400 Total $408,000 $391,900 $499,200 $449,100 $46,400 Instructions a. 1. Determine the proper balance in Allowance to Reduce Inventory to Market at May 31, 2020. 2. For the fiscal year ended May 31, 2020, determine the amount of the gain or loss that would be recorded due to the change in Allowance to Reduce Inventory to Market. Prior to adjustment, the Allowance account had a balance of $27,500. b. Explain the rationale for the use of the lower-of-cost-or-market rule as it…
14. Decker Company has five products in its inventory. Information about the December 31, 2021, inventory follows. Product Quantity UnitCost UnitSellingPrice A 1,200 $ 14 $ 20 B 1,000 19 22 C 800 5 10 D 400 9 8 E 800 18 17 The cost to sell for each product consists of a 10 percent sales commission. Required:1. Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or net realizable value (LCNRV) rule is applied to individual products.2. Determine the carrying value of inventory at December 31, 2021, assuming the LCNRV rule is applied to the entire inventory.3. Assuming inventory write-downs are common for Decker, record any necessary year-end adjusting entry based on the amount calculated in requirement 2.
32.Pomelo Company has the policy of valuing inventory at the lower of cost and net realizable value using the allowance method. Allowance to Reduce Inventory to NRV account at December 31, 2021 before adjustment is P86,000. Analysis of the net realizable value and costs of their products on December 31, 2021 revealed a valuation at the lower of cost and net realizable value of P1,200,000 applied to the individual products. The total cost of its products on that date is P1,300,000.How much is the loss from decline in NRV that Pomelo Company should report in profit or loss for the year ended December 31, 2021?
Sheffield Corp. sells three different products. The following information is available on December 31: Inventory item Units Cost per unit Market value per unit X 320 $4.20 $3.50 Y 640 $2.00 $1.50 Z 1590 $3.00 $4.00 After applying the lower-of-cost-or-net-realizable-value rule to each item, what will Sheffield total ending inventory balance be? $6850 $8435 $7394 $7010
E7-16 Dollar-Value LIFO A company adopted the LIFO method when its inventory was $1,800. One year later its ending inventory was $2,100, and costs had increased 5% during the year. Required: What is the ending inventory using dollar-value LIFO? Round to the nearest dollar.
P8.6 (LO 3) (Compute FIFO, LIFO, Average-Cost—Periodic and Perpetual) Ehlo Company is a multi product firm. Presented below is information concerning one of its products, the Hawkeye. Date Transaction Quantity Price/Cost 1/1 Beginning inventory 1,000 $12 2/4 Purchase 2,000 18 2/20 Sale 2,500 30 4/2 Purchase 3,000 23 11/4 Sale 2,200 33 Instructions Compute ending inventory AND cost of goods sold, assuming Ehlo uses: Perpetual system, LIFO cost flow. Periodic system, weighted-average cost flow. Perpetual system, moving-average cost flow.