Late in the year, sofware city began carry WorldCrafter, a new word processing software program. At December 31, Software City's perpetual inventory records included the following cost layers in its inventory of worldCrafter program. Purchase Date Quantity Unit Cost Total Coost Nov. 4 ....................................... 8 $400 $3,200 Dec. 12 ..................................... 20 $310 6,200 Total on hand .................... 28 $9,400 a. At December 31, Software City takes a physical inventory and finds that all 28 units WordCrafter are on hand. However, the current replacement cost (whosale price) of product is $250 only per unit. Prepare the entries to record the following 1. This write down of the inventory tho the lower of cost or marker at December 31.(Company policy is to charge LCM adjustment of less than $2,000 to Cost of Gods Sold and larger amounts to separate loss account) 2. The cash sale of 15 WordCrafter program on January 19, at a retail price of $350 each. Assume that Software City uses the FIFO flow assumption. b. Now assume that the curretn repalcement cost of the wordCrafter program is $405 each. S physical inventory finds only 25 of these programs on hans at December 31. (For this part, return to the original information and ignore what you did in part a.) 1. prepare the joournal entry to record the shrinkage loss assuming that Software City uses the FIFO flow assupmtion 2. Prepare the journal entry to record the shrinkage loss assuming that Software City uses the LIFO flow assumption. 3.Which cost flow assumption(FIFO or LIFO) results in the lowest net income for the period? Would using this assumption really mean that the company's operations are less efficient? explain please
Late in the year, sofware city began carry WorldCrafter, a new word processing software program. At December 31, Software City's perpetual inventory records included the following cost layers in its inventory of worldCrafter program.
Purchase Date Quantity Unit Cost Total Coost
Nov. 4 ....................................... 8 $400 $3,200
Dec. 12 ..................................... 20 $310 6,200
Total on hand .................... 28 $9,400
a. At December 31, Software City takes a physical inventory and finds that all 28 units WordCrafter are on hand. However, the current replacement cost (whosale price) of product is $250 only per unit. Prepare the entries to record the following
1. This write down of the inventory tho the lower of cost or marker at December 31.(Company policy is to charge LCM adjustment of less than $2,000 to Cost of Gods Sold and larger amounts to separate loss account)
2. The cash sale of 15 WordCrafter program on January 19, at a retail price of $350 each. Assume that Software City uses the FIFO flow assumption.
b. Now assume that the curretn repalcement cost of the wordCrafter program is $405 each. S physical inventory finds only 25 of these programs on hans at December 31. (For this part, return to the original information and ignore what you did in part a.)
1. prepare the joournal entry to record the shrinkage loss assuming that Software City uses the FIFO flow assupmtion
2. Prepare the
3.Which cost flow assumption(FIFO or LIFO) results in the lowest net income for the period? Would using this assumption really mean that the company's operations are less efficient? explain please
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