Team A - Week 3 - P9-9

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required note(s). Current Assets Inventory Section (Note 1.) Finished goods (Note 2.) $641,000 Work-in-process 108,700 Raw materials 227,400 Factory supplies 64,800 Total inventories $1,041,900 Note 1. Lower-of-cost-or-market method (First-In, First-Out) is applied towards finished goods, and total inventory basis for work-in-process, raw material, and factory supplies. Note 2. $136,500 of bar-end shifters ($182,000 * 75%) were pledged as collateral for a bank loan, and 50% ($97,500) of the head tube shifters (finished goods) is being held on a consignment basis by ca B.) C.) P9-9 A.)   Prepare the inventory section of Brooks’s balance sheet as of November 30, 2007, including any When the inventory this is in the inventory account is less than the the market the company is paying more for the inventory than it is actually worth. What this will mean on the income statement is that the income statement will show that the company is paying more for the inventory than they are actually making. This will show that that the company has a negative gross profit and that they are not making any profit on the goods that they are selling to others. Because the Brooks Company made a firm purchase commitment for the derailleurs, they will have to recognize the expense as an estimated liability for their fiscal year ending November 30, 2007 according to the matching principle. Additionally, they will have to disclose those commitments in the notes to
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This note was uploaded on 01/12/2011 for the course ACCT 423 taught by Professor Rob during the Spring '10 term at DeVry Long Beach.

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Team A - Week 3 - P9-9

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