INTERMEDIATE ACCOUNTING
1st Edition
ISBN: 9781264920532
Author: SPICELAND
Publisher: MCG
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Chapter 9, Problem 9.3BE
Lower of cost or market
• LO9–1
[This is a variation of BE 9–1, modified to focus on the lower of cost or market.] Ross Electronics has one product in its ending inventory. Per unit data consist of the following: cost, $20; replacement cost, $18; selling price, $30; selling costs, $4. The normal profit margin is 30% of selling price. What unit value should Ross use when applying the lower of cost or market (LCM) rule to ending inventory?
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Students have asked these similar questions
Assume in each case that the selling expenses are $9 per unit and that the normal profit is $6 per unit. Calculate the limits for each case. Then enter the amount that should be used for lower of cost or market.
Selling Price
Upper Limit
Replacement Cost
Lower Limit
Cost
LCM
(a)
$63
$
$44
$
$53
$
(b)
52
35
39
(c)
59
44
45
(d)
54
38
36
QUESTION 1
If the mark-up on cost is 20%, please and the selling price(Excl. VAT) is R600, which of the following amounts is the correct Cost Price(Excl. VAT)?
O A. R100
OB. R580
O C. R575
O D. R500
QUESTION 2
Which one of the following statements with respect to VAT is false?
O A. There is no indication of a VAT charge next to zero-rated item listed on an invoice.
O B. In general, no input VAT claim is allowed by SARS on the purchase of a double-cab delivery vehicle.
O C. The buyer of zero rated supplies will not get any refund from SARS for buying usch an item.
O D. If a vendor sells only VAT exempt supplies, it may not register for VAT.
PA1. 10.1 When prices are rising (inflation), which costing method would produce thehighestvalue for
gross margin? Choose between first-in, first-out (FIFO); last-in, first-out (LIFO); and weighted average
(AVG). Evansville Company had the following transactions for the month.
Number of Units
Cost per Unit
$6,000
7,000
7,500
Purchase
2
Purchase
3
Purchase
4
Calculate the gross margin for each of the following cost allocation methods, assuming A62 sold just one
unit of these goods for $10,000. Provide your calculations.
A. first-in, first-out (FIFO)
B. last-in, first-out (LIFO)
C. weighted average (AVG)
Chapter 9 Solutions
INTERMEDIATE ACCOUNTING
Ch. 9 - Explain the (a) lower of cost or net realizable...Ch. 9 - What are the various levels of aggregation to...Ch. 9 - Describe the alternative approaches for recording...Ch. 9 - Explain the gross profit method of estimating...Ch. 9 - The Rider Company uses the gross profit method to...Ch. 9 - Explain the retail inventory method of estimating...Ch. 9 - Both the gross profit method and the retail...Ch. 9 - Define each of the following retail terms: initial...Ch. 9 - Explain how to estimate the average cost of...Ch. 9 - Prob. 9.10Q
Ch. 9 - Explain the LIFO retail inventory method.Ch. 9 - Discuss the treatment of freight-in, net markups,...Ch. 9 - Explain the difference between the retail...Ch. 9 - Prob. 9.14QCh. 9 - Prob. 9.15QCh. 9 - Explain the accounting treatment of material...Ch. 9 - Identify any differences between U.S. GAAP and...Ch. 9 - (Based on Appendix 9) Define purchase commitments....Ch. 9 - (Based on Appendix 9) Explain how purchase...Ch. 9 - Lower of cost or net realizable value LO91 Ross...Ch. 9 - Lower of cost or net realizable value LO91 SLR...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.5BECh. 9 - Gross profit method; solving for unknown LO92...Ch. 9 - Retail inventory method; average cost LO93 Kiddie...Ch. 9 - Retail inventory method; LIFO LO93 Refer to the...Ch. 9 - Conventional retail method LO94 Refer to the...Ch. 9 - Conventional retail method LO94 Roberson...Ch. 9 - Lower of cost or net realizable value LO91 Herman...Ch. 9 - Lower of cost or net realizable value LO91 The...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.11ECh. 9 - Concepts; terminology LO91 through LO97 Listed...Ch. 9 - Prob. 9.1PCh. 9 - Prob. 9.3PCh. 9 - Prob. 9.8PCh. 9 - Prob. 9.1DMPCh. 9 - Prob. 9.3DMPCh. 9 - Prob. 9.4DMPCh. 9 - Prob. 9.5DMPCh. 9 - Prob. 9.6DMPCh. 9 - Prob. 9.7DMPCh. 9 - Real World Case 98 Various inventory issues;...Ch. 9 - Prob. 9.9DMPCh. 9 - Judgment Case 910 Inventory errors LO97 Some...Ch. 9 - Prob. 9.12DMPCh. 9 - Prob. 2CCTC
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