E6-24 Applying the lower-of-cost-or-market rule to inventories [5 min]
Eagle Resources, which uses the FIFO method, has the following account balances at
May 31, 2012, prior to releasing the financial statements for the year:
Beg Bal
End Bal
12,500
13,000
Inventory
Bal 69,000
Cost of goods sold
Bal 118,000
Sales revenue
Eagle has determined that the replacement cost (current market value) of the
May 31, 2012, ending inventory is $12,800.
Requirements
1. Prepare any adjusting journal entry required from the information given.
2. What value would Eagle report on the balance sheet at May 31, 2012, for
inventory?
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