Question
In: Accounting
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. Prepare the journal entries required as at 31 December 2018 assuming that a loss method and the Allowance to Reduce Inventory to NRV Account is used to record for the write down of the inventory.
- Assume that at 31 December 2018, the account of Allowance to Reduce Inventory to NRV had a credit balance of RM2,200. Determine the amount of the gain or loss that would be recorded due to the change in the Allowance to Reduce Inventory to NRV account as in (a). Show the related journal entry.
- Identify TWO (2) differences between consignor and consignee in a consignment basis.
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! |
| IT Tech Bhd | ||||||||
| Answer a | A | B | C=A*B | D | E | F=D-E | G= Lower of B or F | H=A*G |
| Item | Units | Cost Per unit | Cost | Sell price | Selling Cost /Unit | NRV per unit | Lower of Cost or NRV per unit | Lower of Cost or NRV |
| Speaker | 30.00 | 65.00 | 1,950.00 | 75.50 | 4.60 | 70.90 | 65.00 | 1,950.00 |
| Keyboard | 550.00 | 25.00 | 13,750.00 | 33.90 | 2.80 | 31.10 | 25.00 | 13,750.00 |
| Pen drive | 800.00 | 18.00 | 14,400.00 | 16.60 | 0.65 | 15.95 | 15.95 | 12,760.00 |
| Monitor | 230.00 | 135.00 | 31,050.00 | 142.30 | 8.70 | 133.60 | 133.60 | 30,728.00 |
| Ending Inventory | 61,150.00 | 59,188.00 | ||||||
| Decline in Value | 1,962.00 |
| Loss method | ||
| Journal Entry | ||
| Account | Debit $ | Credit $ |
| Loss Due to Decline of Inventory | 1,962.00 | |
| Inventory | 1,962.00 | |
| Allowance to Reduce Inventory to NRV Account | ||
| Journal Entry | ||
| Account | Debit $ | Credit $ |
| Loss Due to Decline of Inventory | 1,962.00 | |
| Allowance to Reduce Inventory to NRV Account | 1,962.00 | |
| Answer b | Amount $ |
| Balance in Allowance to Reduce Inventory to Net Realizable Value | 2,200.00 |
| Less: Decline in Value | 1,962.00 |
| Gain | 238.00 |
| Journal Entry | ||
| Account | Debit $ | Credit $ |
| Allowance to Reduce Inventory to NRV Account | 238.00 | |
| Gain on inventory valuation | 238.00 | |
| Answer c |
| Difference between Consignor and Consignee- |
| 1. The consignor is the sender of the consignment and consignee is the receiver of the consignment. |
| 2. The consignor is the owner of the goods sent on consignment. Consignee is no the owner of those goods. At the end of the year any unsold stock will be included in the inventory of consignor and not consignee. |
ekkarill92 answered 1 year agoRelated Solutions
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...
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...
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...
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...
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...
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
Latest Questions
- Assume that attributes with the same name in different relations represent the same domain and that...
- JAVA: Use existing Java Stack class to solve the "Balancing Symbols" problem. The symbols are (),...
- K-NN and Perceptron theory question If we don’t care about the size of the TRAINING SET...
- Make a C program that simulates time-sharing in the operating system. Please follow the instructions provided:...
- What are some current challenges faced by food companies in reducing food waste?
- Arthur buys $2,200.00 worth of stock. Six months later, the value of the stock has risen...
- The Following table is based on a time study for a metal working operation Obs (minutes...
ADVERTISEMENT