b. Vargo uses the periodic LIFO method to account for the \"tibed\" inventory Va
ID: 2593776 • Letter: B
Question
b. Vargo uses the periodic LIFO method to account for the "tibed" inventory Vargo had the following inventory available for sale during the year. Balance on 1/1/17 3/15 purchase 5/20 purchase 7/11 purchase 10/27 purchase 12/2 purchase Uni 15,000 55,000 4 12,000 25,000 33,000 55,000 Cost $5.25 $6.30 $6.65 $7.08 $7.15 $7.43 Freight-in of $2.55 per unit was incurred on "tibed" inventory, and is not reflected in the cost per unit above. Compute cost of goods sold for the "tbed" product, and ending inventory (at historical cost). c. If the ending inventory had a replacement cost of $145,000 on 12/31/17, a net realizable value of $139,000 and a normal profit of $26,500, what is the dollar value of inventory reported at on the balance sheet? What adjustment and journal entry (if any) would be required?Explanation / Answer
b A B C=A*B Date Units Costs Total amount 1/1/17 Balance 15,000 $5.25 $ 78,750 3/15 Purchase 55,000 $6.30 $ 346,500 5/20 Purchase 42,000 $6.65 $ 279,300 7/11 Purchase 25,000 $7.08 $ 177,000 10/27 Purchase 33,000 $7.15 $ 235,950 12/2 Purchase 55,000 $7.43 $ 408,650 Ending Inventory at historical costs $ 408,650 No sales are indicated in the data given c If the Net realizable value is lower than cost, the Net realizable value should be reported in the balance sheet Amount to be reported $139,000 Historical cost $ 408,650 Net realizable value $139,000 Loss of value $ 269,650 ADJUSTING JOURNAL ENTRY Account Debit Credit Inventory Valuation Loss $ 269,650 Inventory $ 269,650
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