InstructionsInventory ValuationJournal EntriesInstructionsLower-of-Cost-or-MarketFor the weighted-average method, round calculations to two decimal places. If required, round your final answers to the nearest cent.1. Calculate the total amount to be assigned to the ending inventory under each of the following periodic inventory methods:a. FIFOb. Weighted-average2. Assume that the market price per unit (cost to replace) of Stalberg's inventory on December 31, 20--, was $26. Calculate the total amount to be assigned to the ending inventory on December 31 under each ofthe following methods:a. FIFO lower-of-cost-or-marketb. Weighted-average lower-of-cost-or-market3. What journal entry would be made under lower-of-cost-or-market for parts 2(a) FIFO and 2(b) Weighted-average?If no entry is required, type "No entry required" in the account name box and leave the amount boxes blank or enter "0"Stalberg Company's beginning inventory and purchases during the fiscal year ended December 31, 20-, were as follows:Total CostUnitsUnit PriceJan. 1$20$200Beginning inventory101st purchaseMar, 51022220Sept. 92nd purchase10252503rd purchaseDec. 81030300$97040There are 10 units of inventory on hand on December 31.

Question
Asked Nov 18, 2019
88 views
Instructions
Inventory Valuation
Journal Entries
Instructions
Lower-of-Cost-or-Market
For the weighted-average method, round calculations to two decimal places. If required, round your final answers to the nearest cent.
1. Calculate the total amount to be assigned to the ending inventory under each of the following periodic inventory methods:
a. FIFO
b. Weighted-average
2. Assume that the market price per unit (cost to replace) of Stalberg's inventory on December 31, 20--, was $26. 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. What journal entry would be made under lower-of-cost-or-market for parts 2(a) FIFO and 2(b) Weighted-average?
If no entry is required, type "No entry required" in the account name box and leave the amount boxes blank or enter "0"
Stalberg Company's beginning inventory and purchases during the fiscal year ended December 31, 20-, were as follows:
Total Cost
Units
Unit Price
Jan. 1
$20
$200
Beginning inventory
10
1st purchase
Mar, 5
10
22
220
Sept. 9
2nd purchase
10
25
250
3rd purchase
Dec. 8
10
30
300
$970
40
There are 10 units of inventory on hand on December 31.
help_outline

Image Transcriptionclose

Instructions Inventory Valuation Journal Entries Instructions Lower-of-Cost-or-Market For the weighted-average method, round calculations to two decimal places. If required, round your final answers to the nearest cent. 1. Calculate the total amount to be assigned to the ending inventory under each of the following periodic inventory methods: a. FIFO b. Weighted-average 2. Assume that the market price per unit (cost to replace) of Stalberg's inventory on December 31, 20--, was $26. 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. What journal entry would be made under lower-of-cost-or-market for parts 2(a) FIFO and 2(b) Weighted-average? If no entry is required, type "No entry required" in the account name box and leave the amount boxes blank or enter "0" Stalberg Company's beginning inventory and purchases during the fiscal year ended December 31, 20-, were as follows: Total Cost Units Unit Price Jan. 1 $20 $200 Beginning inventory 10 1st purchase Mar, 5 10 22 220 Sept. 9 2nd purchase 10 25 250 3rd purchase Dec. 8 10 30 300 $970 40 There are 10 units of inventory on hand on December 31.

fullscreen
check_circle

Expert Answer

Step 1

Requirement 1 a):

Calculate the cost of ending inventory under FIFO (Periodic inventory system):

help_outline

Image Transcriptionclose

Calculation of Cost of Ending Inventory - FIFO Rate per Unit (S) Number of Total Cost Details Units (S) 300 $300 3rd Purchases Ending Inventory 10 30 10 Table (1)

fullscreen
Step 2

Requirement 1 b):

Calculate the cost of ending inventory under weighted average cost method (Periodic inventory system):

help_outline

Image Transcriptionclose

Step 1: Calculate the weighted-average cost Total Cost of Goods Available For Sale Weighted-average Cost =| Total number of units Available for Sale, $970 40 -S24.25 Step 2: Calculate the amount of ending inventory. "Number of units in Ending inventory Cost of Ending inventory = (x Weighted-average cost per unit = 10 units x $24.25 -S242.50

fullscreen
Step 3

Requirement 2 a):

Calculate the cost of ending inventory under FIFO me...

help_outline

Image Transcriptionclose

LCM Valuation FIFO Market Particulars Cost Cost (C A or B) Whichever is (A) (B) lesser Ending inventory under FIFO $300 $260 $260 Table (2) Working note: Calculate the market cost. (Number of units in Ending inventory Market cost x Market price per unit =10 units x $26 -S260

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Accounting

Related Accounting Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: Coastal Shores Inc. (CSI) was completely destroyed by Hurricane Fred on August 5, 2013.  At January ...

A: Inventory: Inventory refers to the stock of goods purchased, utilized and maintained by the company ...

question_answer

Q: Patterson Company operates three segments. Income statements for the segments imply that profitabili...

A: Relevant costs refer to the all the related cost of a product and relevant sales refers to the sales...

question_answer

Q: Support department cost allocation—reciprocal services method Davis Snowflake & Co. produces Chr...

A: Under the reciprocal service method cost incurred by service departments are allocated to other depa...

question_answer

Q: Hansell Company's management wants to prepare budgets for one of its products, Duraflex, for July 20...

A: Since we are entitled to answer up to 3 sub-parts, we’ll answer the first 3 schedules. Please resubm...

question_answer

Q: You want to compare Rite Aid's leverage to other firms in the Retail Pharmaceutical industry. To ass...

A: Ratio analysis is the analytical tool used by the analyst to measure the financial performance of th...

question_answer

Q: Which inventory method will result in lower net income in a period of rising prices? Which inventory...

A: First-in-First-Out (FIFO): In this method, items purchased initially are sold first. So, the value o...

question_answer

Q: For each of the following situations, indicate the nature and amount of the penalty that could be im...

A: Penalty:Penalty refers to the punishment imposed on a person or company for breaking the rule and la...

question_answer

Q: Missouri River Supply Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During...

A: Since we only answer up to 3 sub-parts, we’ll answer the first three. Please resubmit the question a...

question_answer

Q: The debits to Work in Process—Assembly Department for April, together with data concerning productio...

A: Conversion Cost: The cost that includes direct labor and factory overheads is reported as conversion...