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Richmond Sporting Goods, which uses the FIFO method

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P6-34A Applying the lower-of-cost-or-market rule to inventories [5 min]

Richmond Sporting Goods, which uses the FIFO method, has the following account
balances at August 31, 2012, prior to releasing the financial statements for the year:

bal 14,500

Cost of goods sold
bal 67,000

Sales revenue
bal 117,000

Richmond has determined that the replacement cost (current market value) of the
August 31, 2012, ending inventory is $13,500.


1. Prepare any adjusting journal entry required from the information given.

2. What value would Richmond report on the balance sheet at August 31, 2012,
for inventory?

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