Homework Help is Here – Start Your Trial Now!
Business
Accounting
lower-of-LIFO-cost-or-market.

lower-of-LIFO-cost-or-market.

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter8: Inventories: Special Valuation Issues
Section: Chapter Questions
Problem 2MC: Moore Company uses the LIFO cost flow assumption and carries Product A in inventory on December 31,...
See similar textbooks
icon
Related questions
Topic Video
Question
Splish Brothers, Inc. values its inventory at the lower-of-LIFO-cost-or-market. The following information is available from the company’s inventory records as of December 31, 2020.

Item
  
Quantity
  
Unit
Cost
  
Replacement
Cost/Unit
  
Estimated Selling
Price/Unit
  
Completion & Disposal
Cost/Unit
  
Normal Profit
Margin/Unit
X490   8,976   $11.00   $10.52     $12.32     $2.64     $2.99  
X512   4,356   6.16   6.60     7.83     0.22     1.58  
X682   15,840   16.72   16.37     27.76     2.86     7.92  
Z195   11,000   12.54   12.32     17.42     1.23     5.06  
Z846   7,568   10.56   11.22     12.28     1.85     0.97  

(a)

 
Correct answer icon
Your answer is correct.
Calculate the lower-of-cost-or-market using the individual-item approach. (Round answers to 2 decimal places, e.g. 52.75.)
 

(b)

 
Partially correct answer icon
Your answer is partially correct.
Show the journal entries Splish Brothers, Inc. will need to make in order to write down the ending inventory from cost to market. Assume this is Splish Brothers’s first year of operations. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.)

Account Titles and Explanation
Debit
Credit
Cost of Goods sold Method:    
enter an account title
enter a debit amount
enter a credit amount
enter an account title
enter a debit amount
enter a credit amount
Loss method:    
enter an account title
enter a debit amount
enter a credit amount
enter an account title
enter a debit amount
enter a credit amount
Splish Brothers, Inc. values its inventory at the lower-of-LIFO-cost-or-market. The following information is available from the company's inventory records as of December 31, 2020. Unit Replacement Estimated Selling Completion & Disposal Normal Profit Item Quantity Cost Cost/Unit Price/Unit Cost/Unit Margin/Unit X490 8,976 $11.00 $10.52 $12.32 $2.64 $2.99 X512 4,356 6.16 6.60 7.83 0.22 1.58 X682 15.840 16.72 16.37 27.76 2.86 7.92 Z195 11,000 12.54 12.32 17.42 1.23 5.06 Z846 7,568 10.56 11.22 12.28 1.85 0.97 (a) Your answer is correct. Calculate the lower-of-cost-or-market using the individual-item approach. (Round answers to 2 decimal places, e.g. 52.75.) Lower-of-Cost-or-Market (Per unit basis) X490 2$ 9.68 X512 6.16 X682 $ 16.72 X195 $ 12.32 X846 2$ 10.43 eTextbook and Media List of Accounts Attempts: unlimited (b) Your answer is partially correct. Show the journal entries Splish Brothers, Inc. will need to make in order to write down the ending inventory from cost to market. Assume this is Splish Brothers's first year of operations. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit Cost of Goods sold Method: Cost of Goods Sold 26588 Allowance to Reduce Inventory to Market 26588 Loss method: Loss Due to Market Decline of Inventory 26588 Allowance to Reduce Inventory to Market 26588 eTextbook and Media List of Accounts Save for Later Attempts: unlimited Submit Answer
Transcribed Image Text:Splish Brothers, Inc. values its inventory at the lower-of-LIFO-cost-or-market. The following information is available from the company's inventory records as of December 31, 2020. Unit Replacement Estimated Selling Completion & Disposal Normal Profit Item Quantity Cost Cost/Unit Price/Unit Cost/Unit Margin/Unit X490 8,976 $11.00 $10.52 $12.32 $2.64 $2.99 X512 4,356 6.16 6.60 7.83 0.22 1.58 X682 15.840 16.72 16.37 27.76 2.86 7.92 Z195 11,000 12.54 12.32 17.42 1.23 5.06 Z846 7,568 10.56 11.22 12.28 1.85 0.97 (a) Your answer is correct. Calculate the lower-of-cost-or-market using the individual-item approach. (Round answers to 2 decimal places, e.g. 52.75.) Lower-of-Cost-or-Market (Per unit basis) X490 2$ 9.68 X512 6.16 X682 $ 16.72 X195 $ 12.32 X846 2$ 10.43 eTextbook and Media List of Accounts Attempts: unlimited (b) Your answer is partially correct. Show the journal entries Splish Brothers, Inc. will need to make in order to write down the ending inventory from cost to market. Assume this is Splish Brothers's first year of operations. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit Cost of Goods sold Method: Cost of Goods Sold 26588 Allowance to Reduce Inventory to Market 26588 Loss method: Loss Due to Market Decline of Inventory 26588 Allowance to Reduce Inventory to Market 26588 eTextbook and Media List of Accounts Save for Later Attempts: unlimited Submit Answer
Expert Solution
steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Accounting for Merchandise Inventory
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
College Accounting, Chapters 1-27
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS