50.1K

Verified Solution

Link Copied!

Account	Debit	Credit
Cash	$ 177,382
Accounts Receivable	604,621
Allowance for Doubtful Accounts		$ 9,216
Inventory	323,810
Prepaid Advertising	238,032
Land	162,375
Buildings	894,600
Accumulated Depreciation Buildings		293,940
Construction in Progress	632,000
Equipment	576,059
Accumulated Depreciation Equipment		209,476
Notes Receivable	36,972
Discount on Notes Receivable		7,622
Accounts Payable		391,037
Notes Payable		784,165
Common Stock ($1 par)		192,500
Retained Earnings		683,219
Dividends	104,260
Sales Revenue		5,697,316
Sales Returns	219,622
Cost of Goods Sold	3,052,539
Insurance Expense	226,154
Interest Expense	24,156
Legal Expense	85,720
Salaries and Wages Expense	746,372
Utilities Expense	163,817
	$8,268,491	$8,268,491

Reed uses the dollar-value LIFO cost method for inventory reporting purposes. Reed adopted this method on December 31, 2019. The following information pertains to the companys inventory at year-ends 2019 and 2020:

Date	Inventory at Year-End Prices	Relevant Price Index
December 31, 2019	$271,296	100
December 31, 2020	$323,810	109

Reed uses perpetual FIFO for day-to-day bookkeeping purposes and then converts its accounts to the dollar-value LIFO cost method at reporting dates. Give the FIFO-to-LIFO conversion entry required at December 31, 2020. (Assume there was no difference in the FIFO and LIFO amounts at year-end 2019.)

Once the company determines the Inventory balance under the new method (LIFO), it must consider the need for an inventory write-down. Reed applies the write-down procedure to the inventory as a whole. Information concerning the companys December 31, 2020 inventory follows:

Net realizable value	292,760
Normal profit margin	23,495
Replacement cost	323,810

Answer & Explanation Solved by verified expert

See Answer