In: Accounting
Exercise 5-10A Lower-of-cost-or-market rule: perpetual system LO 5-2
The following information pertains to Hagen Metal Work’s ending
inventory for the current year:
Unit | Unit | ||||||||||
Item | Quantity | Cost | Market Value | ||||||||
C | 200 | $ | 13 | $ | 12 | ||||||
D | 190 | 15 | 12 | ||||||||
K | 58 | 11 | 13 | ||||||||
M | 44 | 8 | 12 | ||||||||
Required
a. Determine the value of the ending inventory
using the lower-of-cost-or-market rule applied to (1) each
individual inventory item and (2) the inventory in aggregate.
b. Prepare any necessary journal entries, assuming the decline in value is immaterial, using the (1) individual method and (2) aggregate method. Hagen Metal Works uses the perpetual inventory system. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Note: Enter debits before credits.
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Note: Enter debits before credits.
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