Problem 3 (20 points, expected time 10-15 minutes)

NOTE: Show all of your work for maximum partial credit!

Skittles-R-Us is trying to determine its ending inventory in accordance with Generally Accepted Accounting Principles.

At the end of the year, the ending inventory cost from the book was $64,000,000 in total for 8,000,000 bags of Skittles.

The following information is also available regarding each individual bag of Skittles:

Sales price: $15 per bag

Disposal cost: $2 per bag

Profit margin: 60% of sales price

Replacement cost: $6 per bag is the most current purchase price

Required:

(1)(15 points)

a)Determine the ending inventory value that should be reported on the balance sheet if ending inventory at the year-end were based on LIFO inventory method. Show all calculations.

b)b) Determine the ending inventory that should be reported on the balance sheet if ending inventory at the year-end were based on FIFO inventory method. Show all calculations.

(2)(5 points) Record any necessary adjusting entry in proper form. If no adjusting entry needed, state No journal entry required.

a)If ending inventory at the year-end were based on LIFO inventory method:

b)if ending inventory at the year-end were based on FIFO inventory method: