AGED 260 Lecture 11: Accy 301 Class lecture 11
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The following independent situations occurred at the end of Year 2 and require an inventory report in the year-end financial statements. The dollar amounts provided in the table below are on a per-unit basis. In Situation 5., assume that the company is applying IFRS.
Situation | Historical cost | Estimated selling price | Cost of completion | Cost of disposal | Current replacement cost | Normal profit margin |
1. | $60 | $70 | -- | $5 | $55 | $7 |
2. | $50 | $80 | $20 | $6 | $53 | $3 |
3. | $45 | $44 | $3 | $2 | $40 | $4 |
4. | $29 | $40 | $4 | $6 | $28 | $5 |
5. | $100 | $110 | $15 | $5 | $82 | $5 |
Select from the option list provided the appropriate measurement attributes for reporting inventory in the year-end financial statements. Each choice may be used once, more than once, or not at all.
Situation | Answer |
1. The company accounts for its inventory using the LIFO method. | |
2. The company accounts for its inventory using the average-cost method. | |
3. The company accounts for its inventory using the FIFO method. | |
4. The company accounts for its inventory using the LIFO method. | |
5. (Under IFRS) Answer Choices: ( Historical Cost, Net Realizable Value, Net Realizable Value minus Normal Profit Margin, Current Replacement Cost) |
Purchases | 350,000 |
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ABC uses a periodic inventory system, and the ending inventory for each year is determined by taking a complete physical inventory at year-end. A physical count was taken on December 31, 2014, and the inventory on-hand at that time totaled $75,000, which reflects historical cost. Record the 2014 Cost of Goods Sold and the 12/31/14 Inventory adjustment. Additionally, ABC adheres to GAAP by recording ending inventory at the lower of cost and net realizable value at a total inventory level. A review of inventory data further indicated that the current retail sales value of the ending inventory is $110,000 and estimated costs of completion and shipping is 15% of retail. Be sure to make an additional adjustment, if necessary, to properly value ending inventory using the Loss and Allowance methodology. For Income Statement presentation purposes, be sure to use the Loss Method for accounting for adjustments of inventory to market value.
How would I format this journel entry?