Cost Allocation and Lower-of-Cost-or-Market Douglas Company's beginning inventory and purchases during the fiscal year ended December 31, 20--, were as follows: Units Unit Price Total Cost January 1, 20-- Beginning inventory 1,120 $ 7.9 $ 8,848 March 5 1st purchase 890 8.9 7,921 April 16 2nd purchase 400 9.4 3,760 June 3 3rd purchase 690 10.1 6,969 August 18 4th purchase 590 10.8 6,372 September 13 5th purchase 810 11.8 9,558 November 14 6th purchase 420 13.7 5,754 December 3 7th purchase 520 13.75 7,150 5,440 $ 56,332 There are 1,000 units of inventory on hand on December 31. Required: For the weighted-average method, round calculations to two decimal places. Round all final answers to the nearest dollar. 1. Calculate the total amount to be assigned to the ending inventory and cost of goods sold on December 31 under each of the following methods: Cost of Goods Sold Cost of Ending Inventory a. FIFO b. LIFO c. Weighted-average 2. Assume that the market price per unit (cost to replace) of Douglas's inventory on December 31 was $13. 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. Prepare required entries to apply: a. FIFO lower-of-cost-or-market b. Weighted-average lower-of-cost-or-market If no entry is required, select "No entry required" and leave the amount boxes blank or enter "0".

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...

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Cost Allocation and Lower-of-Cost-or-Market

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

		Units	Unit Price	Total Cost
January 1, 20--	Beginning inventory	1,120	$	7.9	$	8,848
March 5	1st purchase	890		8.9		7,921
April 16	2nd purchase	400		9.4		3,760
June 3	3rd purchase	690		10.1		6,969
August 18	4th purchase	590		10.8		6,372
September 13	5th purchase	810		11.8		9,558
November 14	6th purchase	420		13.7		5,754
December 3	7th purchase	520		13.75		7,150
		5,440			$	56,332

There are 1,000 units of inventory on hand on December 31.

Required:

For the weighted-average method, round calculations to two decimal places. Round all final answers to the nearest dollar.

1. Calculate the total amount to be assigned to the ending inventory and cost of goods sold on December 31 under each of the following methods:

	Cost of Goods Sold	Cost of Ending Inventory
a. FIFO
b. LIFO
c. Weighted-average

2. Assume that the market price per unit (cost to replace) of Douglas's inventory on December 31 was $13. 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. Prepare required entries to apply:

a. FIFO lower-of-cost-or-market
b. Weighted-average lower-of-cost-or-market

If no entry is required, select "No entry required" and leave the amount boxes blank or enter "0".

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