8 - Chapter 8-1 C H A P T E R C H A P T E R 8 8 VALUATION...

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Unformatted text preview: Chapter 8-1 C H A P T E R C H A P T E R 8 8 VALUATION OF INVENTORIES: VALUATION OF INVENTORIES: A COST-BASIS APPROACH A COST-BASIS APPROACH Intermediate Accounting 13th Edition Kieso, Weygandt, and Warfield Chapter 8-2 I nventor y Classifi cati o n and Contr ol Physical Goods I ncluded in I nventor y Costs I ncluded i n I nventor y Cost Flow Assumption s LI FO: Special I ssues Basis for Selecti on Valuation of I nventor ies: Valuation of I nventor ies: Cost-basis Appr oach Cost-basis Appr oach Chapter 8-3 Type of Business Mer chandiser Mer chandiser One inventory account Purchase goods ready for sale Balance Sheet (in t housands) Current asset s Cash 285,000 $ Mar ket able secur it ies 530,000 Account s r eceivable 149,000 Mer chandise invent or y 777,000 Pr epaids 33,000 Tot al cur r ent asset s 1,774,000 I nvest ment s: I nvesment in ABC bonds 321,657 I nvest ment in UC I nc. 253,980 Not es r eceivable 150,000 Land held f or speculat ion 550,000 Sinking f und 225,000 Pension f und 653,798 I nventor y Classification and Systems I nventor y Classification and Systems Chapter 8-4 Type of Business Manufactur er Manufactur er Three accounts Raw materials Work in process Finished goods Balance Sheet (in t housands) Current asset s Cash 285,000 $ Mar ket able secur it ies 530,000 Account s r eceivable 149,000 I nvent or y Raw mat er ials 210,000 Wor k in pr ocess 417,000 Finished goods 150,000 Tot al invent or y 777,000 Pr epaids 33,000 Tot al cur r ent asset s 1,774,000 I nvest ment s: I nvesment in ABC bonds 321,657 I nventor y Classification and Systems I nventor y Classification and Systems Chapter 8-5 Two systems for maintaining inventory records: I nventor y Classification and Systems I nventor y Classification and Systems Contr ol Perpetual system Periodic system Chapter 8-6 | 1. Beginning inventory (100 units at $7 = 700) | 2. Purchase 900 units at $7: | | Inventory 6,300 | Purchases 6,300 Accounts payable 6,300 | Accounts payable 6,300 | 3. Sale of 600 untis at $14: | | Accounts receivable 8,400 | Accounts receivable 8,400 Sales 8,400 | Sales 8,400 Cost of goods sold 4,200 | Inventory 4,200 | | 4. Adjusting entries (ending inventory = 400 units @ $7 = $2,800) | No Entry Necessary | Inventory 2,100 | Cost of goods sold 4,200 | Purchases 6,300 I nventor y Classification and Systems...
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8 - Chapter 8-1 C H A P T E R C H A P T E R 8 8 VALUATION...

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