Assume the perpetual inventory system is used unless stated otherwise.Accounting principles for inventory and applying the lower-of-cost-or-market rule Some of M and C Electronics’s merchandise is gathering dust. It is now December 31, 2018, and the current replacement cost of the ending merchandise inventory is $24,000 below the business’s cost of the goods, which was $97,000. Before any adjustments at the end of the period, the company’s Cost of Goods Sold account has a balance of $380,000. Requirements Journalize any required entries. At what amount should the company report merchandise inventory on the balance sheet? At what amount should the company report cost of goods sold on the income statement? Which accounting principle or concept is most relevant to this situation?
Assume the perpetual inventory system is used unless stated otherwise.Accounting principles for inventory and applying the lower-of-cost-or-market rule Some of M and C Electronics’s merchandise is gathering dust. It is now December 31, 2018, and the current replacement cost of the ending merchandise inventory is $24,000 below the business’s cost of the goods, which was $97,000. Before any adjustments at the end of the period, the company’s Cost of Goods Sold account has a balance of $380,000. Requirements Journalize any required entries. At what amount should the company report merchandise inventory on the balance sheet? At what amount should the company report cost of goods sold on the income statement? Which accounting principle or concept is most relevant to this situation?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 37BE: Lower of Cost or Market Garcia Company uses FIFO, and its inventory at the end of the year was...
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Assume the perpetual inventory system is used unless stated otherwise.Accounting principles for inventory and applying the lower-of-cost-or-market rule
Some of M and C Electronics’s merchandise is gathering dust. It is now December 31, 2018, and the current replacement cost of the ending merchandise inventory is $24,000 below the business’s cost of the goods, which was $97,000. Before any adjustments at the end of the period, the company’s Cost of Goods Sold account has a balance of $380,000.
Requirements
- Journalize any required entries.
- At what amount should the company report merchandise inventory on the balance sheet?
- At what amount should the company report cost of goods sold on the income statement?
- Which accounting principle or concept is most relevant to this situation?
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