At year end 20X8, Ancho Canned Chile has 8,000 units on hand at a weighted- average...

  

Transcribed Image Text:

At year end 20X8, Ancho Canned Chile has 8,000 units on hand at a weighted- average cost of $13 per item. At year end, Ancho learns that the purchase price has fallen to $11. Sales for the year were at $16 per item. Resellers cost Ancho an average $4 per unit. Ancho's normal profit margin is $3 per unit. What is Ancho's ending inventory applying LCM by item? a If the loss is not significant enough to warrant disclosure on the income statement, what year end journal entry does Ancho record? b. If the market value of the inventory increases in the following year, can Ancho recognize the recovery? At year end 20X8, Ancho Canned Chile has 8,000 units on hand at a weighted- average cost of $13 per item. At year end, Ancho learns that the purchase price has fallen to $11. Sales for the year were at $16 per item. Resellers cost Ancho an average $4 per unit. Ancho's normal profit margin is $3 per unit. What is Ancho's ending inventory applying LCM by item? a If the loss is not significant enough to warrant disclosure on the income statement, what year end journal entry does Ancho record? b. If the market value of the inventory increases in the following year, can Ancho recognize the recovery?

Answer rating: 100% (QA)

a The market value of the ending inventory shall be middle value of i Replacement cost ... View the full answer