Question
In: Accounting
Forester Company has five products in its inventory. Information about the December 31, 2018, inventory follows....
Forester Company has five products in its inventory. Information
about the December 31, 2018, inventory follows.
| Product | Quantity |
Unit Cost |
Unit Replacement Cost |
Unit Selling Price |
|||||||||||||
| A | 900 | $ | 24 | $ | 26 | $ | 30 | ||||||||||
| B | 500 | 29 | 25 | 32 | |||||||||||||
| C | 600 | 17 | 16 | 22 | |||||||||||||
| D | 1,000 | 21 | 18 | 20 | |||||||||||||
| E | 900 | 28 | 26 | 27 | |||||||||||||
The cost to sell for each product consists of a 15 percent sales
commission. The normal profit percentage for each product is 25
percent of the selling price.
Required:
1. Determine the carrying value of inventory at
December 31, 2018, assuming the lower of cost or market (LCM) rule
is applied to individual products.
2a. Determine the carrying value of inventory at
December 31, 2018, assuming the LCM rule is applied to the entire
inventory.
2b. Assuming inventory write-downs are usual
business practice for Forester, record any necessary year-end
adjusting entry.
Determine the carrying value of inventory at December 31, 2018, assuming the lower of cost or market (LCM) rule is applied to individual products. (Do not round intermediate calculations.)
|
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Solutions
Expert Solution
Solution:-
Determine the carrying value of inventory at December 31, 2018, assuming the lower of cost or market (LCM) rule is applied to individual products. (Do not round intermediate calculations.)
|
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2-a-Inventory carrying value when LCM rule is applied to entire inventory is lower of cost and market value which is $92,500 and $82,705 respectively. Therefore inventory carrying value will be $82,705.
2-b- Preparing adjusting entry as follows:-
| Account Title and Explanation | Debit | Credit |
| Cost of goods sold | 9795 | |
| Inventory | 9795 |
ekkarill92 answered 2 years agoRelated Solutions
Forester Company has five products in its inventory. Information about the December 31, 2018, inventory follows....
Forester Company has five products in its inventory. Information
about the December 31, 2018, inventory follows. Product Quantity
Unit Cost Unit Replacement Cost Unit Selling Price A 1,000 $ 28 $
30 $ 34 B 900 33 29 36 C 500 21 20 26 D 600 25 22 24 E 700 32 30 31
The cost to sell for each product consists of a 10 percent sales
commission. The normal profit percentage for each product is 35
percent of the...
Forester Company has five products in its inventory. Information about the December 31, 2018, inventory follows:...
Forester Company has five products in its inventory. Information
about the December 31, 2018, inventory follows:
product
quantity
unit cost
unit replacement cost
unit selling price
a
1000
$10
$12
$16
b
800
15
11
18
c
600
3
2
8
d
200
7
4
6
e
600
14
13
13
The cost to sell for each product consists of a 15 percent sales
commission. The normal profit percentage for each product is 40
percent of the selling price.
(1)...
Forester Company has five products in its inventory. Information about the December 31, 2018, inventory follows....
Forester Company has five products in its inventory. Information
about the December 31, 2018, inventory follows.
Product
Quantity
Unit
Cost
Unit
Replacement
Cost
Unit
Selling
Price
A
900
$
16
$
18
$
22
B
1,000
21
17
24
C
900
9
8
14
D
1,000
13
10
12
E
900
20
18
19
The cost to sell for each product consists of a 10 percent sales
commission. The normal profit percentage for each product is 40
percent of the...
Forester Company has five products in its inventory. Information about the December 31, 2018, inventory follows....
Forester Company has five products in its inventory. Information
about the December 31, 2018, inventory follows.
Product
Quantity
Unit
Cost
Unit
Replacement
Cost
Unit
Selling
Price
A
600
$
12
$
14
$
18
B
1,000
17
13
20
C
600
5
4
10
D
600
9
6
8
E
600
16
14
15
The cost to sell for each product consists of a 10 percent sales
commission. The normal profit percentage for each product is 25
percent of the...
Forester Company has five products in its inventory. Information about the December 31, 2018, inventory follows....
Forester Company has five products in its inventory. Information
about the December 31, 2018, inventory follows.
Product
Quantity
Unit
Cost
Unit
Replacement
Cost
Unit
Selling
Price
A
1,000
$
26
$
28
$
32
B
500
31
27
34
C
900
19
18
24
D
900
23
20
22
E
800
30
28
29
The cost to sell for each product consists of a 10 percent sales
commission. The normal profit percentage for each product is 35
percent of the...
Forester Company has five products in its inventory. Information about the December 31, 2021, inventory follows....
Forester Company has five products in its inventory. Information
about the December 31, 2021, inventory follows.
Product
Quantity
Unit
Cost
Unit
Replacement
Cost
Unit
Selling
Price
A
500
$
18
$
20
$
24
B
800
23
19
26
C
700
11
10
16
D
800
15
12
14
E
700
22
20
21
The cost to sell for each product consists of a 10 percent sales
commission. The normal profit for each product is 40 percent of the
selling...
Forester Company has five products in its inventory. Information about the December 31, 2021, inventory follows....
Forester Company has five products in its inventory. Information
about the December 31, 2021, inventory follows.
Product
Quantity
Unit
Cost
Unit
Replacement
Cost
Unit
Selling
Price
A
900
$
25
$
27
$
31
B
900
30
26
33
C
500
18
17
23
D
700
22
19
21
E
500
29
27
28
The cost to sell for each product consists of a 10 percent sales
commission. The normal profit for each product is 35 percent of the
selling...
Forester Company has five products in its inventory. Information about the December 31, 2021, inventory follows....
Forester Company has five products in its inventory. Information
about the December 31, 2021, inventory follows.
Product
Quantity
Unit
Cost
Unit
Replacement
Cost
Unit
Selling
Price
A
800
$
13
$
15
$
19
B
600
18
14
21
C
500
6
5
11
D
900
10
7
9
E
600
17
15
16
The cost to sell for each product consists of a 20 percent sales
commission. The normal profit for each product is 30 percent of the
selling...
Forester Company has five products in its inventory. Information about the December 31, 2021, inventory follows....
Forester Company has five products in its inventory. Information
about the December 31, 2021, inventory follows.
Product
Quantity
Unit
Cost
Unit
Replacement
Cost
Unit
Selling
Price
A
800
$
13
$
15
$
19
B
600
18
14
21
C
500
6
5
11
D
900
10
7
9
E
600
17
15
16
The cost to sell for each product consists of a 20 percent sales
commission. The normal profit for each product is 30 percent of the
selling...
Decker Company has five products in its inventory. Information about the December 31, 2021, inventory follows....
Decker Company has five products in its inventory. Information
about the December 31, 2021, inventory follows.
Product
Quantity
Unit
Cost
Unit
Selling
Price
A
1,300
$
26
$
32
B
1,100
31
34
C
1,000
4
8
D
600
7
6
E
1,000
30
29
The cost to sell for each product consists of a 10 percent sales
commission.
Required:
1. Determine the carrying value of inventory at
December 31, 2021, assuming the lower of cost or net realizable
value...
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