J J Enterprises sells paper cups to fast food franchises On January
J&J Enterprises sells paper cups to fast-food franchises. On January 1, 2011, J&J had 5,000 cups on hand, for which it had paid \$0.10 per cup. During 2011, J&J made the following purchases and sales:
During 2011, J&J sold 240,000 cups at \$0.35 per cup (80,000 cups were sold on April 2 and 160,000 cups were sold on October 20), leaving an ending inventory of 7,000 cups. Assume that J&J uses a perpetual inventory system. J&J uses the lower of cost or market for its inventories, as required by generally accepted accounting principles.
Required:
1. Assume that the market value of the cups is \$0.38 per cup on December 31, 2011. Compute the cost of ending inventory using the FIFO, LIFO, and average cost methods and then apply LCM. (Note: Use four decimal places for per-unit calculations and round all other numbers to the nearest dollar.)
2. Assume that the market value of the cups is \$0.12 per cup on December 31, 2011. Compute the cost of ending inventory using the FIFO, LIFO, and average cost methods and then apply LCM.
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