Reference no: EM132538101

The following information is obtained from Rapid Corporation's financial records:

                                                     Units           Unit Cost              Total Cost

Jan. 1 Beginning inventory         100                $10                   $ 1,000

Mar. 1 Purchased                      400               $12                   $ 4,800

Mar. 5 Sold (250)

May 2 Purchased                        100                 $15                  $ 1,500

Aug. 1 Sold (150)

Oct. 3 Purchased                       100                    $25                $ 2,500

Dec 31 Ending inventory              300                     ?                      ?

(per physical count)

Required:

Question (1) Calculate the cost of the ending inventory, under the assumption that the company uses a perpetual inventory system and the moving-average method for costing inventory. (Calculate the unit price to two decimal places).

Question (2) Calculate the cost of the ending inventory, under the assumption that the company uses a periodic inventory system and the FIFO method for costing inventory.

Question (3) Using the answer to part (2):

(a) Prepare the necessary year-end adjusting entries (you should have two entries) to account for the fact that the ending inventory had a total Market Value of $4,000. The company uses the allowance (indirect) method to apply the Lower of Cost and NRV model and the opening inventory had a NRV of $800.

(b) In income statement for the company for the year ended December 31, 2019 assuming a selling price of $30 per unit and operating expenses of $4,500.