D Company began operations in 2018 and determined its ending inventory at cost and at a LCNRV at December 31,2018 and December 31, 2019. This information is presented below. Cost NRV 12/31/18 520,000 485,000 12/31/19 615,000 585,000 Required: Prepare journal entries required at December 31,2018 and December 31, 2019, assuming that the inventory is recorded at LCNRV, using a perpetual inventory system and the cost of goods sold method. Prepare journal entries required at December 31,2018 and December 31, 2019, assuming that the inventory is recorded at LCNRV, using a perpetual inventory system and the loss method. Which of the two methods above provides the higher income in each year ?
D Company began operations in 2018 and determined its ending inventory at cost and at a LCNRV at December 31,2018 and December 31, 2019. This information is presented below. Cost NRV 12/31/18 520,000 485,000 12/31/19 615,000 585,000 Required: Prepare journal entries required at December 31,2018 and December 31, 2019, assuming that the inventory is recorded at LCNRV, using a perpetual inventory system and the cost of goods sold method. Prepare journal entries required at December 31,2018 and December 31, 2019, assuming that the inventory is recorded at LCNRV, using a perpetual inventory system and the loss method. Which of the two methods above provides the higher income in each year ?
Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter6: Accounting For Merchandising Businesses
Section: Chapter Questions
Problem 36E: The following data were extracted from the accounting records of Harkins Company for the year ended...
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D Company began operations in 2018 and determined its ending inventory at cost and at a LCNRV at December 31,2018 and December 31, 2019. This information is presented below.
Cost | NRV | |
12/31/18 | 520,000 | 485,000 |
12/31/19 | 615,000 | 585,000 |
Required:
- Prepare
journal entries required at December 31,2018 and December 31, 2019, assuming that the inventory is recorded at LCNRV, using a perpetual inventory system and the cost of goods sold method. - Prepare journal entries required at December 31,2018 and December 31, 2019, assuming that the inventory is recorded at LCNRV, using a perpetual inventory system and the loss method.
- Which of the two methods above provides the higher income in each year ?
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