McGoos Company's balance sheet currently states inventory at a total cost of $65,628. However, prices have declined during the year and McGoos is concerned the inventory may be overstated. McGoos has the following items in its ending inventory: Moos Pigoos Chickadoos Cost 24.60 19.20 34.20 Replacement Cost 22.20 18.00 31.80 Selling Price 27.60 27.00 37.50 Costs of CD&T 2.40 1.50 4.50 Normal Profit Margin % 30% 20% 10% Quantity 920 850 780 Required: a) Assuming the company uses FIFO, value the inventory at the lower of cost or net realizable value on an individual item basis, determine the total value of ending inventory, and prepare the journal entry to write-down the value of the ending inventory, if applicable. b) Assuming the company uses LIFO, value the inventory at the lower of cost or market on an individual item basis, determine the total value of ending inventory, and prepare the journal entry to write-down the value of the ending inventory, if applicable.

McGoos Company's balance sheet currently states inventory at a total cost of $65,628. However, prices have declined during the year and McGoos is concerned the inventory may be overstated. McGoos has the following items in its ending inventory: Moos Pigoos Chickadoos Cost 24.60 19.20 34.20 Replacement Cost 22.20 18.00 31.80 Selling Price 27.60 27.00 37.50 Costs of CD&T 2.40 1.50 4.50 Normal Profit Margin % 30% 20% 10% Quantity 920 850 780 Required: a) Assuming the company uses FIFO, value the inventory at the lower of cost or net realizable value on an individual item basis, determine the total value of ending inventory, and prepare the journal entry to write-down the value of the ending inventory, if applicable. b) Assuming the company uses LIFO, value the inventory at the lower of cost or market on an individual item basis, determine the total value of ending inventory, and prepare the journal entry to write-down the value of the ending inventory, if applicable.

Name: Problem 2 - Subsequent Inventory MeasurementMcGoos Company's balance
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Description: Problem 2 - Subsequent Inventory MeasurementMcGoos Company's balance sheet currently states inventory at a total cost of $65,628. However, priceshave declined during the year and McGoos is concerned the inventory may be overstated. McGoos hasthe fol

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter8: Inventories: Special Valuation Issues

Section: Chapter Questions

Problem 13RE: Refer to the information provided in RE8-4. If Paul Corporations inventory at January 1, 2019, had a...

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Inventory Costing Methods Crandall Distributors uses a perpetual inventory system and has the following data available for inventory, purchases, and sales for a recent year. Required: 1. Compute the cost of ending inventory and the cost of goods sold using the specific identification method. Assume the ending inventory is made up of 40 units from beginning inventory, 30 units from Purchase 1, 80 units from Purchase 2, and 40 units from Purchase 3. 2. Compute the cost of ending inventory and cost of goods sold using the FIFO inventory costing method. 3. Compute the cost of ending inventory and cost of goods sold using the LIFO inventory costing method. 4. Compute the cost of ending inventory and cost of goods sold using the average cost inventory costing method. ( Note: Use four decimal places for per-unit calculations and round all other numbers to the nearest dollar.) 5. CONCEPTUAL CONNECTION Compare the ending inventory and cost of goods sold computed under all four methods. What can you conclude about the effects of the inventory costing methods on the balance sheet and the income statement?