The December 31, 2018 inventory of the COYOTE Co. consisted of 3 products, for which the...
The December 31, 2018 inventory of the COYOTE Co. consisted of 3 products, for which the following information is provided.
Original Replacement Est. Disposal Selling Normal Profit
Product Cost Cost Cost Price on Sales
A $300 $280 $100 $500 30%
B 400 350 90 600 15
C 500 600 120 700 10
Instructions: Using the lower of cost or market approach on an individual item basis,
- Compute the inventory valuation that should be reported for each product on 12/ 31/2018.
- Prepare any necessary journal entries for inventory on 12/31/2018.
Homework Answers
ques 1
| product | ceiling | floor | market (not less than replacement cost and not higer than ceiling) | cost | Lower of cost or market |
| (sales - disposal costs) | (ceiling - normal profit) | ||||
| A | 400 | 250 | 280 | 300 | 280 |
| B | 510 | 420 | 420 | 400 | 400 |
| C | 580 | 510 | 580 | 500 | 500 |
ques 2
| Accounts | debit | credit |
| Loss due to decline in inventory | 20 | |
| allowance for reduce inventory to market | 20 | |
| (for item A from 300 to 280) |
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