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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

COST ALLOCATION AND LOWER-OF-COST-OR-MARKET Hall Company’s beginning inventory and purchases during the fiscal year ended December 31, 20--, were as follows:

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There are 1,100 units of inventory on hand on December 31.

REQUIRED

  1. 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:
    1. (a) FIFO
    2. (b) LIFO
    3. (c) Weighted-average (round calculations to two decimal places)
  2. 2. Assume that the market price per unit (cost to replace) of Hall’s inventory on December 31 was $16. Calculate the total amount to be assigned to the ending inventory on December 31 under each of the following methods:
    1. (a) FIFO lower-of-cost-or-market
    2. (b) Weighted-average lower-of-cost-or-market
  3. 3. Prepare required entries to apply:
    1. (a) FIFO lower-of-cost-or-market
    2. (b) Weighted-average lower-of-cost-or-market

1.

(a)

To determine

Calculate the total amount of cost of goods sold and cost of ending inventory on September 30, 20-2 under FIFO method.

Explanation

First-in-First-Out (FIFO): In First-in-First-Out method, the first purchased items are sold first. The value of the ending inventory consists of the recently purchased items.

Calculate the total amount of cost of goods sold an...

2.

(b)

To determine

Calculate the total amount of cost of goods sold and cost of ending inventory on September 30, 20-2 under LIFO method.

3.

(c)

To determine

Calculate the total amount of cost of goods sold and cost of ending inventory on September 30, 20-2 under weighted average cost method.

2.

(a)

To determine

Calculate the cost of ending inventory under FIFO method (Lower of cost or market).

2.

(b)

To determine

Calculate the cost of ending inventory under weighted average cost method (Lower of cost or market).

3.

(a)

To determine

Show the journal entry would be made under lower-of-cost-or-market.

3.

(b)

To determine

Show the journal entry would be made under lower-of-cost-or-market.

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