Suppose that you must prepare quarterly financial statements, and the following table has been started. From examination
Question:
Suppose that you must prepare quarterly financial statements, and the following table has been started. From examination of prior years' financial statements, you know that the gross profit margin is 20%. Calculate the unknown balances using the gross profit method.
Sales | $210,000 |
Cost of Goods Sold | |
Opening Inventory | $117,000 |
Purchases | $127,000 |
Cost of Goods Available for Sale | $Answer |
Closing Inventory | $Answer |
Total Cost of Goods Sold | $Answer |
Gross Profit | $Answer |
Garden Company uses the perpetual inventory system and its inventory consists of four products as at December 31, 2016. Selected information is provided below.
Product | Number of Units | Cost | NRV | LCNRV (Individual) |
1 | 20 | $89 | $103 | $Answer |
2 | 35 | $84 | $63 | $Answer |
3 | 30 | $66 | $57 | $Answer |
4 | 35 | $119 | $171 | $Answer |
Inventory Value Total | $Answer | $Answer |
Required
a) Calculate the LCNRV for each product. Calculate the inventory value that should be reported on December 31, 2016, using the LCNRV applied on an individual item basis.
LCNRV Inventory Value =$Answer
b) Using the results from part a), prepare the journal entry to adjust inventory to LCNRV.
Financial Accounting Tools for Business Decision Making
ISBN: 978-1119368458
7th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine