Lower-of-Cost-or-Market Stalberg Company's beginning inventory and purchases during the fiscal year ended December 31, 20--, were as follows: Units Unit Price Total Cost Jan. 1 Beginning inventory 10 $18 $180 Mar. 5 1st purchase 10 22 220 Sept. 9 2nd purchase 10 25 250 Dec. 8 3rd purchase 10 30 300 40 $950 There are 10 units of inventory on hand on December 31. 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 $ Feedback FIFO assumes that the oldest units have been sold and the newest or freshest units are in the ending inventory. Weighted average is determined by dividing the total cost of units available for sale by the total number of units available for sale. Calculate ending inventory at market and determine which amount should be shown on the company's balance sheet. 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, select "No Entry Required". a. b.

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter13: Accounting For Merchandise Inventory

Section: Chapter Questions

Problem 7SPB: COST ALLOCATION AND LOWER-OF-COST-OR-MARKET Hall Companys beginning inventory and purchases during...

See similar textbooks

Related questions

Concept explainers

Topic Video

Question

Lower-of-Cost-or-Market

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

		Units	Unit Price	Total Cost
Jan. 1	Beginning inventory	10	$18	$180
Mar. 5	1st purchase	10	22	220
Sept. 9	2nd purchase	10	25	250
Dec. 8	3rd purchase	10	30	300
		40		$950

There are 10 units of inventory on hand on December 31.

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
$

Feedback

FIFO assumes that the oldest units have been sold and the newest or freshest units are in the ending inventory.

Weighted average is determined by dividing the total cost of units available for sale by the total number of units available for sale.

Calculate ending inventory at market and determine which amount should be shown on the company's balance sheet.

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, select "No Entry Required".

a.

b.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 4 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

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