Question

P6-30A (similar to) Question Help Some of L and K Electronics's merchandise is gathering dust. It is now December 31, 2018, and the current replacement cost of the ending merchandise inventory is $30,000 below the business's cost of the goods, which was $105,000. Before any adjustments at the end of the period, the company's Cost of Goods Sold account has a balance of $390,000 Read the requirements Requirement 1. Journalize any required entries. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. For situations that do not require an entry, make sure to select "No Entry Required" in the first cell in the "Accounts" column and leave all other cells blank.) The required journal entry would be: Date Accounts and Explanation Debit Credit Х Requirements Dec. 31 1. Journalize any required entries. 2. At what amount should the company report merchandise inventory on the balance sheet? 3. At what amount should the company report cost of goods sold on the income statement? 4. Which accounting principle or concept is most relevant to this situation? Print Done Choose from any list or enter any number in the input fields and then click Check Answer. parts remaining Clear All Check Answer

Answer 1

Answer
Journal entry
1)
Date	Account Titles and Explanations	Debit	Credit
Dec-18	Cost of goods sold	$      30,000
	To, Inventory		$      30,000
	(To record Inventory)
2)	Inventory to be reported in the balance sheet at
	= $105,000 - $30,000
	= $75,000
3)	Cost of goods sold to be reported on the income statement
	= $390,000 + $30,000
	= $420,000
4)	Conservatism Principle is most relevant to this situation.