Unformatted text preview: many or too few of the items in stock. In this example, the company purchases new tires whenever the overall number of units in stock drops to seven or less, and the number purchased should never cause the company's stock to exceed fifteen units. If you study the journal entries on the subsidiary ledger account immediately previous, you will notice that the cost of the tires sold on April 22 changes from $100 in the journal entries to $99 in the inventory account. These examples illustrate two different cost flow methods, so they are intended to be used for illustration purposes only. A company must use one cost flow method consistently....
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- Fall '10
- $100, subsidiary ledger accounts, $99, Inventory Subsidiary Ledger Accounts