solution ch09 - 19,000 12/31/08 Allowance to Reduce...

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AIM 3331-OU1 chapter 9 BRIEF EXERCISE 9-1 (a) Ceiling $198.00 ($217 – $19) Floor $166.00 ($217 – $19 – $32) (b) $106.00 (c) $51.00 BRIEF EXERCISE 9-2 Item Cost Designated Market LCM Jokers $2,000 $1,900 $1,900 Penguins 5,000 4,950 4,950 Riddlers 4,400 4,550 4,400 Scarecrows 3,200 3,070 3,070 EXERCISE 9-4 (10–15 minutes) (a) 12/31/07 Cost of Goods Sold. ................................................. 19,000 Inventory. ..................................................... 19,000 12/31/08 Cost of Goods Sold. ................................................. 15,000 Inventory. ..................................................... 15,000 (b) 12/31/07 Loss Due to Market Decline of Inventory. .............................................................. 19,000 Allowance to Reduce Inventory to Market. ..................................................
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Unformatted text preview: 19,000 12/31/08 Allowance to Reduce Inventory to Market. .............................................................. 4,000* Recovery of Loss Due to Market Decline of Inventory. .................... 4,000 AIM 3331-OU1 chapter 9 EXERCISE 9-4 (Continued) *Cost of inventory at 12/31/07 $346,000 Lower of cost or market at 12/31/07 (327,000 ) Allowance amount needed to reduce inventory to market (a) $ 19,000 Cost of inventory at 12/31/08 $410,000 Lower of cost or market at 12/31/08 (395,000 ) Allowance amount needed to reduce inventory to market (b) $ 15,000 Recovery of previously recognized loss = (a) (b) = $19,000 $15,000 = $4,000. (c) Both methods of recording lower of cost or market adjustments have the same effect on net income....
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solution ch09 - 19,000 12/31/08 Allowance to Reduce...

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