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Midterm #2 Practice Problems Solutions

# Midterm #2 Practice Problems Solutions - Midterm#2 Practice...

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Unformatted text preview: Midterm #2 Practice Problems Solutions 1. Item-by-Item method: HC NRV RC NRV – Profit “Market” LCM Pigs 35000 32000 30000 19750* 30000 30000 Goats 18000 19400 17400 13100 17400 17400 Chickens 14000 11300 12000 6400 11300 11300 Corn 5000 6200 5250 4450 5250 5000 Wheat 7800 7600 7600 4870 7600 7600 Totals 71300 *NRV – Profit for Pigs computed as 32000 – (0.35 x 35000) Category Method: HC NRV RC NRV – Profit “Market” LCM Animals Pigs 35000 32000 30000 19750 Goats 18000 19400 17400 13100 Chickens 14000 11300 12000 6400 Category Totals 67000 62700 59400 39250 59400 59400 Produce Corn 5000 6200 5250 4450 Wheat 7800 7600 7600 4870 idterm #2 Practice Problems Solutions https://www.courses.psu.edu/acctg/acctg471_adj100/mid2hwsol.htm of 6 3/27/2011 10:50 PM Category Totals 12800 13800 12850 9320 12850 12800 Totals 72200 Total Inventory Method: HC NRV RC NRV – Profit “Market” LCM Pigs 35000 32000 30000 19750* Goats 18000 19400 17400 13100 Chickens 14000 11300 12000 6400 Corn 5000 6200 5250 4450 Wheat 7800 7600 7600 4870 Totals 79800 76500 72250 48570 72250 72250 The total inventory method results in the lowest inventory holding loss = 79800 (Historical Cost) – 72250 (LCM) = \$7,550. The journal entry to record this is: Inventory Holding Loss \$7,550 Allowance for Inventory Devaluation \$7,550 2. The layers are computed as follows: Year Inflated Inv. Deflator Deflated Inv Deflated Layer Reinflated Layer 1999 100,000 1/1.00 100,000 100,000 100,000...
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Midterm #2 Practice Problems Solutions - Midterm#2 Practice...

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