Refer to Short Exercises 6-3 through 6-9. At August 31, the accountant for Mountain Cycles determines that

Question:

Refer to Short Exercises 6-3 through 6-9. At August 31, the accountant for Mountain Cycles determines that the current replacement cost of each bike is $40.

Requirements

1. Assuming inventory was calculated using the FIFO method, make any adjusting entry needed to apply the lower-of-cost-or-market rule. Inventory would be reported on the balance sheet at what value on August 31?

2. Assuming inventory was calculated using the LIFO method, make any adjusting entry needed to apply the lower-of-cost-or-market rule. Inventory would be reported on the balance sheet at what value on August 31?

3. Assuming inventory was calculated using the average-cost method, make any adjusting entry needed to apply the lower-of-cost-or-market rule. Inventory would be reported on the balance sheet at what value on August 31?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...