The controller of Pure Metals has provided you with the following information relating to its inventory:...

 

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The controller of Pure Metals has provided you with the following information relating to its inventory: Date Cost $129,200 $239,000 Lower of cost and NRV $ 96,000 Dec 31/20 Group one Group Two Dec 31/21 $201,000 Pure Metals uses the periodic inventory system, and records its inventory at cost. An allowance account is adjusted at the end of each year to adjust the value of the inventory to the lower of cost and NRV. The controller believes the Allowance method is superior to the direct method because the company groups its inventory making it difficult to isolate specific items for a write down to net realizable value. Instructions Prepare the journal entries that Pure Metals would have prepared for its 2020 and 2021 year ends, assuming that 2020 was its first year of operations. The controller of Pure Metals has provided you with the following information relating to its inventory: Date Cost $129,200 $239,000 Lower of cost and NRV $ 96,000 Dec 31/20 Group one Group Two Dec 31/21 $201,000 Pure Metals uses the periodic inventory system, and records its inventory at cost. An allowance account is adjusted at the end of each year to adjust the value of the inventory to the lower of cost and NRV. The controller believes the Allowance method is superior to the direct method because the company groups its inventory making it difficult to isolate specific items for a write down to net realizable value. Instructions Prepare the journal entries that Pure Metals would have prepared for its 2020 and 2021 year ends, assuming that 2020 was its first year of operations.

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Solution Journal Entries for 2020 and 2021 years Loss fro... View the full answer