Computation/Analysis

Cork Co. sells one product, Product A, which it purchases from various suppliers.

Corks partial trial balance at December 31 included the following accounts:

Sales (39,000 units @ $17) $663,000

Sales discounts 9,500

Purchases 437,100

Purchase discounts 22,000

Freight-in 6,000

Freight-out 12,000

Inventory purchases during the year were as follows:

	Units	Cost per Unit	Total Cost
Beginning inventory 1/1	10,000	8.30	83,000
Purchases, quarters ended
March 31	14,000	7.35	116,900
June 30	17,000	8.00	136,000
September 30	15,000	7.60	114,000
December 31	9,000	7.80	70,200
	65,000		520,100

Additional information:

Corks accounting policy is to report inventory in its financial statements at the lower of cost or market, applied to total inventory. Cost is determined under the last-in, first-out (LIFO) method. Cork has determined that, at December 31, the replacement cost of its inventory was $8.20 per unit and the net realizable value was $9.00 per unit. Corks normal profit margin is $1.10 per unit. Cork maintains inventory on a periodic method.

Prepare Corks cost of goods sold, with a supporting schedule of ending inventory. Cork uses the direct method of reporting losses from any market decline of inventory.

Schedule of Cost of Goods Sold
Beginning inventory
Less: Ending Inventory
Cost of Goods Sold

Schedule of Ending Inventory
	Units	Cost per Unit	Total Cost
Beginning inventory
Purchases quarter ended
Ending Inventory

Item	Net Realizable Value (Ceiling)	Net Realizable Value less Normal Profit (Floor)	Designated Market	Cost	Lower of Cost or Market
Product A

Journal Entry (if any)

Accounts				DR	CR