Hi, I need Accounting help please. Garcia Company\'s inventory at the end of the

Question

Hi, I need Accounting help please.

Garcia Company's inventory at the end of the year was recorded in its accounting records at $17,800. Due to technological changes in the market, Garcia would be able to replace its inventory for $16,500.

Required:

1. Using the lower of cost or market method, what amount should Garcia report for inventory on its balance sheet at the end of the year?
$

Hide

2. Prepare the journal entry required to value the inventory at the lower of cost or market.

Dec. 31

  

  

  

  

(Reduced inventory to market value)

Hide

2. Prepare the journal entry required to value the inventory at the lower of cost or market.

Dec. 31

  

  

  

  

(Reduced inventory to market value)

Explanation / Answer

1. Inventory at cost is $ 17,800; Inventory at market price is $ 16,500; As per GAAP, Inventory should be valued at the lower of Cost or Market price (LCM); In this case, Inventory value in the balance sheet to be shown at $ 16,500 as it is lower,

2. The loss $ 1,300 is to be written off by writing the following entry

_________________________________________________________________________________

Date                                             Descripton                      Post Ref. No.           Debit           credit____

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.