Please help Having a trouble to finish this oneThanks Instru

Please help. Having a trouble to finish this one.Thanks

Instructions Inventory Valuation Journal Entries Instructions amount to be assigned to the ending inventory on December 31 under each of the following methods. 3. What journal entry would be made under lower-of-cost-or-market for parts 2(a) FIFO and required, type \"No entry required\" in the account name box and leave the amount boxes blank or Stalberg Company\'s beginning inventory and purchases during the fiscal year ended December 31, 20-, were as Units 10 10 10 10 40 Unit Price Total Cost $19 Jan. 1 Mar. 5 Sept. 9 Dec. 8 Beginning inventory 1st purchase 2nd purchase 3rd purchase $190 220 250 300 $960 25 30 There are 10 units of inventory on hand on December 31. NG 926 PM

Solution

Answer

1.Ending Inventory under FIFO and weighted average is as calculated below:

Date

Explanation

Units

Unit Cost

Cost($)

Jan-01

Opening Inventory

10

19

190

Mar-05

1st Purchase

10

22

220

Sep-09

2nd Purchase

10

25

250

Dec-08

3rd Purchase

10

30

300

TOTAL

40

24

960

Dec-31

Ending Inventory

10

FIFO

Dec-31

Ending Inventory

10

30

300

Weighted average

Dec-31

Ending Inventory

10

24

240

Note: Under FIFO ending inventory of 10 units is the goods purchased in 3rd lot and in weighted average ending inventory is calculated on the basis of weighted rate for total goods available for sale.

2.

When the market price of the goods is $26 per unit then the ending Inventory will be:

FIFO 10*26 = 260 (As cost price is $30 which is more than market price)

Weighted 10*24 = 240 (As cost price is less than market price)

3.

Journal entry to record the reduction in the value of inventory in FIFO is as shown below:

Date

Particulars

L.F

Amount ($)

Amount ($)

Dec-31

Loss on Write down of inventory

40

Merchandise Inventory (10*4)

40

(For recognize loss in Ending inventory)

There will be no change in Inventory for weighted average and hence no journal entry is required.

Date	Explanation	Units	Unit Cost	Cost($)
Jan-01	Opening Inventory	10	19	190
Mar-05	1st Purchase	10	22	220
Sep-09	2nd Purchase	10	25	250
Dec-08	3rd Purchase	10	30	300
	TOTAL	40	24	960
Dec-31	Ending Inventory	10
FIFO
Dec-31	Ending Inventory	10	30	300
Weighted average
Dec-31	Ending Inventory	10	24	240