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Ch 9 Solutions

# Ch 9 Solutions - SOLUTIONS TO EXERCISES EXERCISE 9-1(1520...

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SOLUTIONS TO EXERCISES EXERCISE 9-1 (15–20 minutes) Per Unit Lower-of- Part No. Quantity Cost Market Total Cost Total Market Cost-or- Market 110 600 \$ 95 \$100.00 \$ 57,000 \$ 60,000 \$ 57,000 111 1,000 60 52.00 60,000 52,000 52,000 112 500 80 76.00 40,000 38,000 38,000 113 200 170 180.00 34,000 36,000 34,000 120 400 205 208.00 82,000 83,200 82,000 121 1,600 16 0.50 25,600 800 800 122 300 240 235.00 72,000 70,500 Totals 70,500 \$370,600 \$340,500 \$334,300 (a) \$334,300. (b) \$340,500. EXERCISE 9-2 (10–15 minutes) Item Net Realizable Value (Ceiling) Net Realizable Value Less Normal Profit (Floor) Replacement Cost Designated Market Cost LCM D \$90* \$70** \$120 \$90 \$75 \$75 E 80 60 72 72 80 72 F 60 40 70 60 80 60 G 55 35 30 35 80 35 H 80 60 70 70 50 50 I 60 40 30 40 36 36

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*Estimated selling price – Estimated selling expense = \$120 – \$30 = \$90. **Net realizable value – Normal profit margin = \$90 – \$20 = \$70.
EXERCISE 9-3 (15–20 minutes) Item No. Cost per Unit Replacement Cost Net Realizable Value Net Real. Value Less Normal Profit Designated Market Value LCM Quantity Final Inventory Value 1320 \$3.20 \$3.00 \$4.15* \$2.90** \$3.00 \$3.00 1,200 \$ 3,600 1333 2.70 2.30 2.90 2.40 2.40 2.40 900 2,160 1426 4.50 3.70 4.60 3.60 3.70 3.70 800 2,960 1437 3.60 3.10 2.75 1.85 2.75 2.75 1,000 2,750 1510 2.25 2.00 2.45 1.85 2.00 2.00 700 1,400 1522 3.00 2.70 3.50 3.00 3.00 3.00 500 1,500 1573 1.80 1.60 1.75 1.25 1.60 1.60 3,000 4,800 1626 4.70 5.20 5.50 4.50 5.20 4.70 1,000 4,700 *** \$23,870 *\$4.50 – \$.35 = \$4.15. **\$4.15 – \$1.25 = \$2.90. ***Cost is used because it is lower than designated market value. EXERCISE 9-4 (10–15 minutes) (a) 12/31/10 Cost of Goods Sold .............................. 24,000 Inventory ...................................... 24,000 12/31/11 Cost of Goods Sold .............................. 20,000 Inventory ...................................... 20,000 (b) 12/31/10 Loss Due to Market Decline of Inventory ............................................ 24,000 Allowance to Reduce Inventory to Market ................................... 24,000 12/31/11 Allowance to Reduce Inventory to Market ............................................ 4,000* Recovery of Loss Due to

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Market Decline of Inventory ..... 4,000