Register
Blue Inc. uses LIFO inventory costing. At January 1, 2020, inventory was $217,208 at both cost and market value. At December 31, 2020, the inventory was $287,675 at cost and $261,060 at market value. Use
34,583 views
32 votes
32 votes
Blue Inc. uses LIFO inventory costing. At January 1, 2020, inventory was $217,208 at both cost and market value. At December 31, 2020, the inventory was $287,675 at cost and $261,060 at market value. Use an allowance account. Prepare the necessary December 31 entry under (a) the cost-of-goods-sold method (b) Loss method.

User Lasitha Petthawadu
by
2.4k points

1 Answer

9 votes
9 votes

Answer:

A. Dr Cost of Goods Sold $26,615

Cr Allowance to Reduce Inventory to Market $26,615

B.Dr Loss Due to Market Decline of Inventory $26,615

Cr Allowance to Reduce Inventory to Market $26,615

Step-by-step explanation:

(a) Preparation of the necessary December 31 entry under the cost-of-goods-sold method

COST-OF-GOODS-SOLD METHOD

Dr Cost of Goods Sold $26,615

Cr Allowance to Reduce Inventory to Market $26,615

($287,675 - $261,060)

(b) Preparation of the necessary December 31 entry under Loss method

LOSS METHOD

Dr Loss Due to Market Decline of Inventory $26,615

Cr Allowance to Reduce Inventory to Market $26,615

($287,675 - $261,060)

User Gabriel Samfira
by
3.1k points
Ask a Question
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

1.6m questions

2.0m answers

Other Questions

If the rate of inflation in Japan dramatically increases while the rate of inflation in the United States remains constant, then a. the demand curve for dollars shifts to the left. b. the demand curve
If you buy a one-year bond for $4,000 and the issuer pays you back $5,000 at the end of one year, the interest rate on the bond is
Kylie is risk averse and has $1,000 with which to make a financial investment. She has three options. Option A is a risk-free government bond that pays 5 percent interest each year for two years. Option
Elroy Rocket is entering his senior year as an accounting major and has a number of options for his summer break. His options for the 3 month break follow: (1) Work full time at a local accounting firm
In January of the current year, Dora made a gift of stock to her granddaughter. At the time of the gift, the stock was worth $15,000. Several months later in the same year after the gift, a $500 dividend
Link Copied!