At 12/31/20, the end of Cullumber Company's first year of business, inventory was $6,200 and...
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Accounting
At 12/31/20, the end of Cullumber Company's first year of business, inventory was $6,200 and $5,500 at cost and at market, respectively. Following is data relative to the 12/31/21 inventory of Jenner:
Item
Original Cost Per Unit
ReplacementCost
A
$0.70
$0.35
B
0.45
0.40
C
0.80
0.85
D
0.75
0.65
E
0.85
0.80
Selling price is $1.00/unit for all items. Disposal costs amount to 10% of selling price and a "normal" profit is 20% of selling price. There are 1,500 units of each item in the 12/31/21 inventory.
a.Prepare the entry at 12/31/20 necessary to implement the lower-of-cost-or-market procedure assuming Cullumber uses a contra account for its balance sheet.
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