J&J Enterprises sells paper cups to fast-food franchises. On January 1, 2011, J&J had 5,000 cups on
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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.
Ending Inventory The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...
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Date Feb. 20 May 15 Sept. 12 Units 100,000 57,000 85,000 Cost per Unit $0.12 0.14 0.15 Total Cosh $12,000 7,980 12,750
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1 The market value of 038 per gallon is larger than all of the costs Therefore using the lower of co...View the full answer
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