Question

In: Accounting

Bridgeport Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is...

Bridgeport Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is available from the company’s inventory records as of December 31, 2020.

Item

Quantity

Unit Cost

Replacement
Cost/Unit

Estimated Selling
Price/Unit

Completion & Disposal
Cost/Unit

Normal Profit
Margin/Unit

A 1,800 $8.18 $9.16 $11.45 $1.64 $1.96
B 1,500 8.94 8.61 10.25 0.98 1.31
C 1,700 6.10 5.89 7.85 1.25 0.65
D 1,700 4.14 4.58 6.87 0.87 1.64
E 2,100 6.98 6.87 7.30 0.76 1.09

Greg Forda is an accounting clerk in the accounting department of Bridgeport Co., and he cannot understand why the market value keeps changing from replacement cost to net realizable value to something that he cannot even figure out. Greg is very confused, and he is the one who records inventory purchases and calculates ending inventory. You are the manager of the department and an accountant.
Calculate the lower-of-cost-or-market using the individual-item approach.

Lower-of-Cost-or-Market
(Per unit basis)

Item A $
Item B $
Item C $
Item D $
Item E $

SHOW LIST OF ACCOUNTS

LINK TO TEXT

Show the journal entry he will need to make in order to write down the ending inventory from cost to market. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

Cost of Goods sold Method:      
The Loss method:

Solutions

Expert Solution

Please give positive ratings so I can keep answering. It would help me a lot. Please comment if you have any query. Thanks!
Bridgeport Co A B C=A*B D E F G=E-F H= Lower of D or G J= Lower of H or C K=A*J
Item No. Quantity Cost per unit Total cost Replacement cost per unit Selling price Cost to complete NRV per unit Market value per unit LCNRV Per unit LCNRV
A             1,800.00                8.18         14,724.00                                          9.16                       11.45                                 1.64                  9.81                                 9.16                          8.18 14,724.00
B             1,500.00                8.94         13,410.00                                          8.61                       10.25                                 0.98                  9.27                                 8.61                          8.61 12,915.00
C             1,700.00                6.10         10,370.00                                          5.89                         7.85                                 1.25                  6.60                                 5.89                          5.89 10,013.00
D             1,700.00                4.14            7,038.00                                          4.58                         6.87                                 0.87                  6.00                                 4.58                          4.14      7,038.00
E             2,100.00                6.98         14,658.00                                          6.87                         7.30                                 0.76                  6.54                                 6.54                          6.54 13,734.00
Totals         60,200.00 58,424.00
Item No. LCNRV Per unit
A                     8.18
B                     8.61
C                     5.89
D                     4.14
E                     6.54
Workings for journal entry Amount $
Cost           60,200.00
Less: LCNRV           58,424.00
Difference             1,776.00
Cost of Goods sold Method:
Account Debit $ Credit $
Cost of goods sold             1,776.00
Inventory        1,776.00
The Loss method: Debit $ Credit $
Loss on inventory valuation             1,776.00
Inventory        1,776.00

Related Solutions

Bridgeport Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is...
Bridgeport Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is available from the company’s inventory records as of December 31, 2020. Item Quantity Unit Cost Replacement Cost/Unit Estimated Selling Price/Unit Completion & Disposal Cost/Unit Normal Profit Margin/Unit A 1,800 $8.18 $9.16 $11.45 $1.64 $1.96 B 1,500 8.94 8.61 10.25 0.98 1.31 C 1,700 6.10 5.89 7.85 1.25 0.65 D 1,700 4.14 4.58 6.87 0.87 1.64 E 2,100 6.98 6.87 7.30 0.76 1.09 Greg Forda...
Cullumber Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is...
Cullumber Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is available from the company’s inventory records as of December 31, 2017. Item Quantity Unit Cost Replacement Cost/Unit Estimated Selling Price/Unit Completion & Disposal Cost/Unit Normal Profit Margin/Unit A 1,600 $ 8.33 $ 9.32 $ 11.66 $ 1.67 $ 2.00 B 1,300 9.10 8.77 10.43 1.00 1.33 C 1,500 6.22 5.99 7.99 1.28 0.67 D 1,500 4.22 4.66 6.99 0.89 1.67 E 1,900 7.10 6.99...
Stellar Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is...
Stellar Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is available from the company’s inventory records as of December 31, 2017. Item Quantity Unit Cost Replacement Cost/Unit Estimated Selling Price/Unit Completion & Disposal Cost/Unit Normal Profit Margin/Unit A 1,900 $ 8.10 $ 9.07 $ 11.34 $ 1.62 $ 1.94 B 1,600 8.86 8.53 10.15 0.97 1.30 C 1,800 6.05 5.83 7.78 1.24 0.65 D 1,800 4.10 4.54 6.80 0.86 1.62 E 2,200 6.91 6.80...
Pharoah Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is...
Pharoah Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is available from the company’s inventory records as of December 31, 2020. Item Quantity Unit Cost Replacement Cost/Unit Estimated Selling Price/Unit Completion & Disposal Cost/Unit Normal Profit Margin/Unit A 1,500 $8.40 $9.41 $11.76 $1.68 $2.02 B 1,200 9.18 8.85 10.53 1.01 1.34 C 1,400 6.27 6.05 8.06 1.29 0.67 D 1,400 4.26 4.70 7.06 0.90 1.68 E 1,800 7.17 7.06 7.50 0.78 1.12 Greg Forda...
Shamrock Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is...
Shamrock Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is available from the company’s inventory records as of December 31, 2020. Item Quantity Unit Cost Replacement Cost/Unit Estimated Selling Price/Unit Completion & Disposal Cost/Unit Normal Profit Margin/Unit A 1,600 $7.88 $8.82 $11.03 $1.58 $1.89 B 1,300 8.61 8.30 9.87 0.95 1.26 C 1,500 5.88 5.67 7.56 1.21 0.63 D 1,500 3.99 4.41 6.62 0.84 1.58 E 1,900 6.72 6.62 7.04 0.74 1.05 Greg Forda...
Problem 9-5 Culver Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following...
Problem 9-5 Culver Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is available from the company’s inventory records as of December 31, 2017. Item Quantity Unit Cost Replacement Cost/Unit Estimated Selling Price/Unit Completion & Disposal Cost/Unit Normal Profit Margin/Unit A 1,300 $7.65 $8.57 $10.71 $1.53 $1.84 B 1,000 8.36 8.06 9.59 0.92 1.22 C 1,200 5.71 5.51 7.34 1.17 0.61 D 1,200 3.88 4.28 6.43 0.82 1.53 E 1,600 6.53 6.43 6.83 0.71 1.02...
QUESTION 1 IT Tech Bhd follows the practice of valuing inventory at the Lower of Cost...
QUESTION 1 IT Tech Bhd follows the practice of valuing inventory at the Lower of Cost or Net Realizable Value (LCNRV). The following information is available from the company’s inventory records as of 31 December 2018. Item Quantity Cost per Unit (RM) Estimated selling Price/ Unit (RM) Completion and Selling Cost /Unit Speaker 300 65.00 75.50 4.60 Keyboard 550 25.00 33.90 2.80 Pendrive 800 18.00 16.60 0.65 Monitor 230 135.00 142.30 8.70 REQUIRED: Calculate the LCNRV using the “individual-item” approach....
E9.7 (LO 2) (Lower-of-Cost-or-Market) Wangerin Company follows the practice of pricing its inventory at the lower‐of‐cost‐or‐market,...
E9.7 (LO 2) (Lower-of-Cost-or-Market) Wangerin Company follows the practice of pricing its inventory at the lower‐of‐cost‐or‐market, on an individual-item basis. Item No. Quantity Cost per Unit Cost to Replace Estimated Selling Price Cost of Completion and Disposal Normal Profit 1320 1,200 $3.20 $3.00 $4.50 $0.35 $1.25 1333 900 2.70 2.30 3.50 0.50 0.50 1426 800 4.50 3.70 5.00 0.40 1.00 1437 1,000 3.60 3.10 3.20 0.25 0.90 1510 700 2.25 2.00 3.25 0.80 0.60 1522 500 3.00 2.70 3.80 0.40...
Blue Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis....
Blue Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis. Item No. Quantity Cost per Unit Cost to Replace Estimated Selling Price Cost of Completion and Disposal Normal Profit 1320 1,300 $3.23 $3.03 $4.55 $0.35 $1.26 1333 1,000 2.73 2.32 3.54 0.51 0.51 1426 900 4.55 3.74 5.05 0.40 1.01 1437 1,100 3.64 3.13 3.23 0.25 0.91 1510 800 2.27 2.02 3.28 0.81 0.61 1522 600 3.03 2.73 3.84 0.40 0.51 1573 3,100 1.82...
Martinez Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis....
Martinez Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis. Item No. Quantity Cost per Unit Cost to Replace Estimated Selling Price Cost of Completion and Disposal Normal Profit 1320 1,600 $3.46 $3.24 $4.86 $0.38 $1.35 1333 1,300 2.92 2.48 3.78 0.54 0.54 1426 1,200 4.86 4.00 5.40 0.43 1.08 1437 1,400 3.89 3.35 3.46 0.27 0.97 1510 1,100 2.43 2.16 3.51 0.86 0.65 1522 900 3.24 2.92 4.10 0.43 0.54 1573 3,400 1.94...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT