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BE9-1 (L01) Presented below is information related to Rembrandt Inc.’s inventory.
(per unit) Skis Boots Parkas
Historical cost $190.00 $106.00 $53.00
Selling price 212.00 145.00 73.75
Cost to sell 19.00 8.00 2.50
Cost to complete 32.00 29.00 21.25
Determine the following: (a) the net realizable value for each item, and (b) the carrying
value of each item under LCNRV.
(a)Skis = 212.00-32.00-19.00=161.00
Boots = 145-29-8=108
Parkas = 73.75-21.25-2.5=50
(b)Skis = 161
Boots = 106
Parkas = 50
BE9-3 (L01) Kumar Inc. uses a perpetual inventory system. At January 1, 2017, inventory
was $214,000,000 at both cost and net realizable value. At December 31, 2017, the
inventory was $286,000,000 at cost and $265,000,000 at net realizable value. Prepare the
entry under (a) the cost-of-goods-sold method and (b) the loss method.
(a)
Account Title Debit Credit
Cost of good sold 21,000,000
Inventory 21,000,000
(b)
Account Title Debit Credit
Loss Due to Decline of Inventory to NRV 21,000,000
Inventory 21,000,000
BE9-4 (L02) Presented below is information related to Rembrandt Inc.’s inventory,
assuming Rembrandt uses lower-of-LIFO cost-or-market.
(per unit) Skis Boots Parkas
Historical cost $190.00 $106.00 $53.00
Selling price 212.00 145.00 73.75
Cost to distribute 19.00 8.00 2.50
Current replacement cost 203.00 105.00 51.00
Normal profit margin 32.00 29.00 21.25
Determine the following: (a) the two limits to market value (i.e., the ceiling and the floor)
that should be used in the lower-of-cost-or-market computation for skis, (b) the cost
amount that should be used in the lower-of-cost-or-market comparison of boots, and (c) the
market amount that should be used to value parkas on the basis of the lower-of-cost-or-
market.
(a)Ceiling = 212-19=193
Floor = 212 19-32=161
(b) Ceiling = 145-8=137
Floor = 145 8-29=108
Current replacement cost = 105
Historical cost = 106
Cost amount = 106
(c) Market amount = 51
BE9-5 (L02) Kumar Inc. uses LIFO inventory costing. At January 1, 2017, inventory was
$214,000 at both cost and market value. At December 31, 2017, the inventory was
$286,000 at cost and $265,000 at market value. Prepare the necessary December 31 entry
under (a) the cost-of-goods-sold method and (b) the loss method.
(a)
https://www.coursehero.com/file/18807952/Homework-Ch9/
BE9-1 (L01) Presented below is information related to Rembrandt Inc.’s inventory.
(per unit) Skis Boots Parkas
Historical cost $190.00 $106.00 $53.00
Selling price 212.00 145.00 73.75
Cost to sell 19.00 8.00 2.50
Cost to complete 32.00 29.00 21.25
Determine the following: (a) the net realizable value for each item, and (b) the carrying
value of each item under LCNRV.
(a)Skis = 212.00-32.00-19.00=161.00
Boots = 145-29-8=108
Parkas = 73.75-21.25-2.5=50
(b)Skis = 161
Boots = 106
Parkas = 50
BE9-3 (L01) Kumar Inc. uses a perpetual inventory system. At January 1, 2017, inventory
was $214,000,000 at both cost and net realizable value. At December 31, 2017, the
inventory was $286,000,000 at cost and $265,000,000 at net realizable value. Prepare the
entry under (a) the cost-of-goods-sold method and (b) the loss method.
(a)
Account Title Debit Credit
Cost of good sold 21,000,000
Inventory 21,000,000
(b)
Account Title Debit Credit
Loss Due to Decline of Inventory to NRV 21,000,000
Inventory 21,000,000
BE9-4 (L02) Presented below is information related to Rembrandt Inc.’s inventory,
assuming Rembrandt uses lower-of-LIFO cost-or-market.
(per unit) Skis Boots Parkas
Historical cost $190.00 $106.00 $53.00
Selling price 212.00 145.00 73.75
Cost to distribute 19.00 8.00 2.50
Current replacement cost 203.00 105.00 51.00
Normal profit margin 32.00 29.00 21.25
Determine the following: (a) the two limits to market value (i.e., the ceiling and the floor)
that should be used in the lower-of-cost-or-market computation for skis, (b) the cost
amount that should be used in the lower-of-cost-or-market comparison of boots, and (c) the
market amount that should be used to value parkas on the basis of the lower-of-cost-or-
market.
(a)Ceiling = 212-19=193
Floor = 212 19-32=161
(b) Ceiling = 145-8=137
Floor = 145 8-29=108
Current replacement cost = 105
Historical cost = 106
Cost amount = 106
(c) Market amount = 51
BE9-5 (L02) Kumar Inc. uses LIFO inventory costing. At January 1, 2017, inventory was
$214,000 at both cost and market value. At December 31, 2017, the inventory was
$286,000 at cost and $265,000 at market value. Prepare the necessary December 31 entry
under (a) the cost-of-goods-sold method and (b) the loss method.
(a)
https://www.coursehero.com/file/18807952/Homework-Ch9/
