Question

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:

Answer 1

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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