Question

Discussions Coronado Company began operations in 2019 and determined its ending inventory at cost and at lower-of-LI FO cost-or-market at December 31, Conferences Collaborations 2019, and December 31, 2020. This information is presented below: WileyPLUS Support Lower-of-Cost-or- Cost Market 12/31/19 $374,700 $354,600 12/31/20 405,580 389,640 (a) Prepare the journal entries required at December 31, 2019, and December 31, 2020, assuming that the inventory is recorded at market and a perpetual inventory system (cost-of-goods-sold method) is used. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit 12/31/19 12/31/20 (b) Prepare journal entries required at December 31, 2019, and December 31, 2020, assuming that the inventory is recorded at market under a perpetual system (loss method is used). (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debi Credit 12/31/19 12/31/20 (c) Which of the two methods above provides the higher net income in each year?

Answer 1

Credit $ 20.00 Date Accounts Telle and faplanation Debit 12/31/19 Cose of goods sold 120100 Allowance to reduce éinventory fo market 1a/31/20 Allowance to reduce 9 4160 inventory to market - cost of Goods sold - 1$ 4360 credit Dade Accounts Telle and Explanations. Debed 12/31/19/hase due to marked ] 1$ 20100 decline of inventory Allowance to reduce inventory to marked 12/31/20|Allowance to reduce uce 5 $ 4160 Hinventory to market hoss due to market - decline of inventory $ 20100 $ 4160 © Both methods have the same effeed.

Explanations : * Cost of inventory af 12/31/19 - $ 374700 Lower of costorimaketa: 12/31/19 = $(354600) Allowance amount needed to reduce inventory tomarked (a) = 120100 * Cost. Of inventory at 12931/20 - $ 405,580 Lowere of costormarket al (a/31/20 - 9/389,640) - Allowance amount needed to reduce inventory to market (b) . $.:15,940 i * Recovery of previously recognized loss ş V- 1b). = $ 20100 - $ 15940 - $ HI60 :