that Bobs Boards has the following LIFO perpetual inventory

that Bob\'s Boards has the following LIFO perpetual inventory record for skateboards for the month of March: B(Click the icon to view the perpetual record.) At March 31, the accountant for Bob\'s Boards determines that the current replacement cost of the ending inventory is $10,640. Make any adjusting entry needed to apply the lower-of-cost-or-market rule. Inventory would be reported on the balance sheet at what value on March 31? (Record debits first, then credits. Exclude explanations from any journal entries.) Journal Entry Data Table Date Accounts Debit Credit Mar 31 Inve 240 of 240 Skateboards Cost of Inventory Date Purchases goods sold on hand 9,460 $ 11,130 2,140|$ 8,990 S 10,800 March 8S 1,670 30s 1,810 Print Done

Solution

1.

Here the replacement cost is market value; this is ($10,640) lower than the cost ($10,800). Therefore, the difference (10800 – 10640 = $160) is a loss and it should be debited as “loss on LCM adjustment”; because it reduces profit; the corresponding credit would be “inventory” because of reducing asset.

Journal

Date

Account titles

P.ref

Debit, $

Credit, $

31/03

Loss on LCM adjustment

160

Inventory

160

2.

The value of inventory in the balance sheet is $10,640, since this is lower than the cost of inventory.

Date	Account titles	P.ref	Debit, $	Credit, $
31/03	Loss on LCM adjustment		160
	Inventory			160