Cost Allocation and Lower-of-Cost-or-MarketDouglas Company's beginning inventory and purchases during the fiscal year ended December 31, 20--, were as follows:  UnitsUnit PriceTotal CostJanuary 1, 20--Beginning inventory1,100$8.00     $8,800    March 51st purchase900 9.00      8,100    April 162nd purchase400 9.50      3,800    June 33rd purchase700 10.25      7,175    August 184th purchase600 11.00      6,600    September 135th purchase800 12.00      9,600    November 146th purchase400 14.00      5,600    December 37th purchase500 14.05      7,025      5,400  $56,700     There are 1,000 units of inventory on hand on December 31.Required:For the weighted-average method, round calculations to two decimal places. Round all final answers to the nearest dollar.1.  Calculate the total amount to be assigned to the ending inventory and cost of goods sold on December 31 under each of the following methods: Cost of Goods SoldCost of Ending Inventorya.  FIFO$$b.  LIFO$$c.  Weighted-average$$2.  Assume that the market price per unit (cost to replace) of Douglas's inventory on December 31 was $13. Calculate the total amount to be assigned to the ending inventory on December 31 under each of the following methods:a.  FIFO lower-of-cost-or-market$b.  Weighted-average lower-of-cost-or-market$3.  Prepare required entries to apply:a.  FIFO lower-of-cost-or-market b.  Weighted-average lower-of-cost-or-market If no entry is required, select "No entry required" and leave the amount boxes blank or enter "0".  DescriptionDebitCredita.             b.

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Asked Nov 18, 2019
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Cost Allocation and Lower-of-Cost-or-Market

Douglas Company's beginning inventory and purchases during the fiscal year ended December 31, 20--, were as follows:

    Units Unit Price Total Cost
January 1, 20-- Beginning inventory 1,100 $ 8.00      $ 8,800    
March 5 1st purchase 900   9.00        8,100    
April 16 2nd purchase 400   9.50        3,800    
June 3 3rd purchase 700   10.25        7,175    
August 18 4th purchase 600   11.00        6,600    
September 13 5th purchase 800   12.00        9,600    
November 14 6th purchase 400   14.00        5,600    
December 3 7th purchase 500   14.05        7,025    
    5,400     $ 56,700    

 

There are 1,000 units of inventory on hand on December 31.

Required:

For the weighted-average method, round calculations to two decimal places. Round all final answers to the nearest dollar.

1.  Calculate the total amount to be assigned to the ending inventory and cost of goods sold on December 31 under each of the following methods:

  Cost of Goods Sold Cost of Ending Inventory
a.  FIFO $ $
b.  LIFO $ $
c.  Weighted-average $ $

2.  Assume that the market price per unit (cost to replace) of Douglas's inventory on December 31 was $13. Calculate the total amount to be assigned to the ending inventory on December 31 under each of the following methods:

a.  FIFO lower-of-cost-or-market $
b.  Weighted-average lower-of-cost-or-market $

3.  Prepare required entries to apply:

a.  FIFO lower-of-cost-or-market  
b.  Weighted-average lower-of-cost-or-market  

If no entry is required, select "No entry required" and leave the amount boxes blank or enter "0".

 

  Description Debit Credit
a.      
             
b.      
             
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Expert Answer

Step 1

First-in-First-Out (FIFO): In First-in-First-Out method, the first purchased items are sold first. The value of the ending inventory consists of the recently purchased items.

Step 2

1.

 Calculate the total amount of cost of goods sold and cost of ending inventory on September 30, 20-2 under FIFO method:

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FIFO Method Cost of Goods Sold Cost of Ending Inventory Unit Date 20-1 Unit Total (S) Total (S) Particulars Units Units Price (S) Price (S) 8.00 20-2 Beginning inventory 1st purchase 2nd purchase 3rd purchase |4th purchase September 13 5th purchase November 14 6th purchase December 3 7th purchase Total 8.00 January 1 March 5 April 16 June 3 1,100 8,800 S0 900 9 8,100 0 3,800 400 9.5 9.5 700 10.25 7,175 6,600 8,400 10.25 August 18 600 11 11 1,200 5,600 700 12 100 12 400 14 14 0 14.05 500 14.05 7,025 $42,875 1,000 $13,825 4.400|

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Step 3

2.

Calculate the total amount of cost of goods sold and cost of ending inv...

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LIFO Method Cost of Goods Sold Cost of Ending Inventory Date 20-1 Unit Unit Total (S) Total (S) Particulars Units Units Price (S) 20-2 Price (S) Beginning inventory 1st purchase 2nd purchase |3rd purchase |4th purchase September 13 5th purchase November 14 6th purchase December 3 7th purchase Total 8,000 January 1 March 5 1,000| 100 8.00 800 8.00 8,100 3,800 900 9 9 April 16 June 3 400 9.5 9.5 0 700 10.25 7,175 6,600 9,600 5,600 10.25 August 18 600 11 11 800 12 12 0 0 400 14 14 14.05 7,025 $48,700 500 14.05 0 $8.000 4,400 1,000

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