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For the yi PROBLEMIV 1 Points pes e in ctheoof Goods Sld schedule tor Part 1: Review the t Part 2: Caloulate the lower of cost or or market for 2018 using the direct me Exhibit A: Ending Inventory Count documents in the Exhibits belowng ora, Inc's 2018 financial statements Seckors's 2018 ieventory to value ending inventory at the lower of cost OFFICE MEMO INTERO To: Accounting Manager From: Controller Re: 2017 Ending Inventory Count 0t 147 s of the annual chysical inventory as of December 31, 2017 were 20,000 as of units at $7.50 per unit Exhibit B: Inventory Footnote Disclosure NOTE 4: INVENTORIES Inventories consist primarily of one product whchw Inventories are valued at the lower of cost or market. We determine last-in, first-out (LIFO) method. $9.20 per unit and the net realizable value was $1000 per unit. Our normal profit margin is S1.20 per unit. purchase from various suppliers cost on the basis of the At December 31, the replacement cost of our inventory was Exhibit C: Purchase Journal kora, Inc. - Purchase Journal Freight Purchase Accounts Units Purchases In Discounts Payable 15,000 115, 000 5,75013,450)117,300 18, 000 150, 000 7,500 4, 500) 153,000 12,000 120,000 6,000 (3,600) 127,500 25, 000 175,000 8,750 (5,250) 178, 500 Date March 31 June 30 September 30 December 31 Total 000 560,00026,000 116t B001 571,200 一 Exhibit D: Sales Journal Seckora, Inc. -Sales Journal Freight Sales Accounts Date Sales Out Discounts Receivable 33, 750) 75,000 1.125,000 5t5 Total

Answer 1

1	Cost of goods sold schedule:
	Uder LIFO method, We assume that goods purchased last are sold first
	Here, 75000 units are sold in the following order:
	Date	Units	Total cost
	Dec 31.	25000	178500
	Sep 30.	12000	127500
	Jue 30.	18000	153000
	Mar 31.	15000	117300
	Jan 1.	5000	37500
		(Beg. Inv)	(5000*7.50)
		75000	613800
	Cost of goods sold=$ 613800
2	Cost of inventory will be the balance units remaining in the beginning inventory
	Cost=15000*7.5=$ 112500
	Market value:
	Replacement cost of $ 9.20 shall be taken as market value subject to ceilig ad floor limit
	Ceiling limit=Net realizable value=$ 10 per unit
	Floor limit=Ceiling limit-normal profit margin=10-1.20=$ 8.80 per unit
	Replacement cost shall come within ceiling and floor limit
	$ 9.20 comes within $ 10 and $ 8.80
	Hence,market value=Replaement cost=$ 9.20
	Total value of inventory using market value=15000*9.20=$ 138000
	Lower of cost or market= Lower of $ 112500 and $ 138000= $ 112500 (at cost)
3	No adjusting etry required to make since the inventory are valued at cost