Question

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:

Some of E and S Electronics' merchandise is gathering dust. It is now December 31, 2024, and the current replacement cost of the ending merchandise inventory is $22,000 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 $413,000. 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 - X Dec. 31 Cost of Goods Sold 22,000 Requirements Merchandise Inventory 22,000 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? Requirement 2. At what amount should the company report merchandise inventory on the balance sheet? E and S should report merchandise inventory on the balance sheet at Requirement 3. At what amount should the company report cost of goods sold on the income statement? Print nto Done E and S should report cost of goods sold on the income statement at Requirement 4. Which accounting principle or concept is most relevant to this situation? is the reason to account for merchandise inventory at directs accountants to decrease the accounting value of an asset if it appears unrealistically high.

Answer 1

Requirement 1

Date	Accounts and Explanation	Debit	Credit
Dec. 31	Cost of Goods Sold	22,000
	Merchandise Inventory		22,000
	To write merchandise inventory down to market value.

Requirement 2

Merchandise inventory should be reported at $83,000 on the balance sheet.

Calculations:

$ 105,000	Merchandise inventory prior to adjustment
(22,000)	Adjustment
$ 83,000	Merchandise inventory, adjusted

Requirement 3

Cost of goods sold should be reported at $435,000 on the income statement.

Calculations:

$ 413,000	Cost of goods sold prior to adjustment
22,000	Adjustment
$ 435,000	Cost of goods sold, adjusted

Requirement 4

The conservatism principle is most relevant to this situation