Question

Malone Company determined its ending inventory at cost and at LCNRV at December 31, 2017 December 31, 2018, and December 31, 2019, as shown below. Cost NRV 12/31/17 $650,000 $650,000 12/31/18 780,000 712,000 12/31/19 905,000 830,000 Instructions (a) Prepare the journal entries required at December 31, 2018, and at December 31, 2019, assuming that a perpetual inventory system and the cost-of-goods-sold method of adjusting to LCNRV is used. (b) Prepare the journal entries required at December 31, 2018, and at December 31, 2019, assuming that a perpetual inventory is recorded at cost and reduced to LCNRV using the loss method. his Material May Be Protected By Copyright Law (Title 17, U.S. Code)

Answer 1

VA Answer: The method a real perpetual Inventory system: perpetual inventory System is an inventory valuation in which the value of inventory is opdated at time basis. In and this value method, the of Indian value of inventory the is cost available of goods at all times. Journal Entries debit Credit particolars credit Date 31/12/2018 $ 68000 $ 68000 cost of goods Sold tk or [4780000 - $ 12000 To Allowance to reduce inventory to NRV Being record the inventory reduced to NRV 31/12/2019 Allowance to redole inventory 37000 to NRV tk or To cost of goods sold Ak [$ 905000 - $830000] - $68000 = $7000 $7000 [Being to reduced record the inventory to NRV].

2) Journal Entries I Credit Date 31/12/2018 particulars Debit Loss due to decline in $ 68000 inventory to Nav Ak Dr. To Allowance for reduction in inventory to Nav Ale. [Being record the inventory declining $ 68000 31/12/209 $ 7000 Allowance for reduction in inventory to NRV Ale or To Inventory loss All [Being record the loss of inventory. $7000
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